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About Google Book Search Google's mission is to organize the world's information and to make it universally accessible and useful. Google Book Search helps readers discover the world's books while helping authors and publishers reach new audiences. You can search through the full text of this book on the web at |http: //books .google .com/I THE -^. Three Systems . OK LIFE INSURANCE, p:MBKAriNG ' I. The Level Premium System. II. The Natural Premium System. in. The Assessment System. BY MERVIN JABOR, Actuary of the Insukancb Dbpartmbnt of hxmois, and Manager of Thb Bureau of Life Insurance Information. PUBLISHED BY THE BUREAU OF LIFE INSURANCE INFORM \T10N. • ■»■.■» » »« • CHICAGO : Chas. J. Johnson, Printer and Binder, 102 MADISON STREET. 1886. • • * .\ ■ • ► • * • • . .:•. ' - • •• • . I THE NEW YORK PUBLIC LIBRARY TILDEN FOCNDATtONS R 1933 L COPYRIGHT 1885 BY MERVIN TABOR. ALL RIGHTS RESERVED. 1^° CONTENTS. Introduction '...,... ^.:.' „!...' CHAPTER!.' Fire iDsurance. — Life Insurance.— Man as Productive Prop- erty. — That Business Block. — The Siicceasful Capitalist, —The Young Business Man.— The Law of Mortality.— How Mortality TabiesW made. —The Two Tables used most extensiTely in America CHAPTER n. Actuary.— Assets.-Brokerage.— Commissions-— Stock Com- panies. — Mixed Companies. — Contribution System of Dividends. —Cash Diviaenoa.— Reversionary Dividends. — Expectation of Life. — Forfeiture. — Lapse. ^Loading. — Loss. — Mortality CHAPTER IIL Policy.— Single-Payment Life, with Bsample— Five -Pay- ment Life, witli Eiample.— Ten -Payment Life, witli Ex- amples (1) and (3).— Fifteen -Payment Life.— Twenty- Payment Life. — Ordinary Life, with Example.— Term Life. — Renewable Term Life. — Quarterly Renewable «f^ Term Life ^ CHAPTER IV. 90 _^ Endowment Insurance.- Ordinary Endowments. — Limited ^^ Payment Endowments. — Endowment Compared with 9) Term Insurance.— The Investment Element.— The Insur- M^ ance Element.— Assumed Examples, at ages 30, 35. 30, 85. — An Endowment Premium Analyzed.— Actual Results Shown in Matured Endowments.— Seven Examples.— What a Stampede if our National Banks were to Offer the same Investments combined with Cheap Insurance. — Semi- Endowments 4 CONTENTS. CHAPTER V. Tontine Insurance. — Semi-Tontine Insurance. — McClintock's Description of them. — Senate Resolution No. 100, of the Ohio Legislature. — A Committee of Investigation. — Mem- bers of the Conmiittee. — ^The Investigation.— Report of the Committee. — Sworn Testimony.— Remarks, etc. etc. — Lapses of Tontine as Compared with Non-Tontine Insur ance in the New York Life Insurance Company.— Divi- dends on Tontine and Non-Tontine Policies in the New York Life ; twelve examples. — Premiums. — Premium Notes.— Surplus. — Value of a Policy. — The Reserve. — Abstract of Net Values. — Life Insurance Failures. — Life Insurance Expenses as Compared with those of Fire Insurance and Railroad Corporations. — The New Test of Economy.— What Elizur Wright said 3d CHAPTER VI. The Level Premium System. — Its Distinguishing Character- istics. — Requisites for Soundness and Permanency. — Analysis of a Level Premium. — ^The Reserve Element. — The Mortality Element. — The Expense Element.— Sources of Dividends.— Lapses and Forfeitures. — Cash Surrender Values, etc., etc 59 CHAPTER VII. Classification of the Level Premium Companies. — Class A, Class B, Class C. — Class A Defined. — The Massachusetts Non Forfeiture Law of 1880.— Letter from Elizur Wright. — Letter from the New England Mutual Life Insurance Company. — Letter from the State Mutual Life Insurance Company. — Letters from the Massachusetts Mutual Life Insurance Company. — Letter from the John Hancock Mutual Life Insurance Company. — Letter from the Berk- shire Life Insurance Company. — Five Examples Illustrat- ing the Workings of the Law 71 • CHAPTER Vni. Class B Defined. — The Non-Forfeiture Law of Maine. — Examples Illustrating It.— The Non -Forfeiture Law of Michigan, as Amended in 1881.— Table Illustrating it as applied to an Ordinary Life Policy.— Examples of Poli- cies issued by Companies in Class B. — Ten- Year Renew- able Term Policies.— Rates at all Ages. — ^Actual Results. 84 CONTENTS. CHAPTER IX. Class C Defined— The New York Insurance Law of 1880.— Three Examples of Matured Endowments m a C Class Company. — The Iowa Insurance Law with Reference to Reserves.— An Actual Example illustrating it. — ^An As- sumed Example of a Tontine Policy, with Extended Remarks on the same. — Results of Matured Tontine Policies 94 CHAPTER X. The Natural Premium System. —Its Distinguishing Character- istics. — ^Requisites for Soimdness and Permanency. — The Elements of a Level Premium Compared with the Ele- ments of a Natural Premium. — Table A, showing the Reserve and Amount of Insurance at Risk on a Level Pre- mium Policy of 110,000, age 40, for 27 years. — Remarks on the same. — Table B, showing the Reserve and Amount of Insurance at Risk on a Natural Premium Policy of $10,000, age 40, for 27 years. — Remarks on the same. — Table C, showing the Net and Gross Natural Premiums for |1,000, ages 20 to 99, inclusive.— Remarks on the same. — Uniform Per Centum Loading discusssd. — Sheppard Homans' Plan Analyzed. — Table D, showing the Quar- terly Maximum Guaranty Fund; the Quarterly Maximum Death Fund ; the Quarterly Maximum Mortuary Pre mium ; the Quarterly Expense Charge, and the Quarterly Maximum Gross Premium, for a Quarterly Renewable Natural Premium Policy of $1,000, on the Homans plan, at each age from 15 to 80, inclusive.— Examples of Policies 103 CHAPTER XI. The Assessment System.— Its Distinguishing Characteristics. — Requisites for Soundness and Permanency. — The Har- per Plan, as operated by the Mutual Reserve Fund Life Association. — President Harper's Letter. — Full Text of Certificate of Membership.— Applicant's Declaration. — Deed of Trust with the Central Trust Company of New York. — Admission Fees. — Annual Dues or Expense Fees. — Rates of Assessment, etc , etc 120 CHAPTER Xn. The Fouse Plan, as operated by the Fidelity Mutual Life Association. — Special Features. — Full Text of Policy. — By-Laws. — Table F, giving Maximum Assessments. — Membership Fees. — Annual Dues.— Medical Examination Fee.— Assumed Policy of $1,000, age 39.— Table G, showing Probable Cost, etc. — The Process of Levying Assessments Explained 132 6 CONTENTS. CHAPTER XIII. The Safety Fund Plan of Assessment Insurance, operated by the Hartford Life and Annuity Insurance Company. — Admission Pees.— Annual Dues. — Mortuary Payments. — How the Safety Fund is Accumulated. — How it must be Invested. — How it must be Handled. — When it can be Distributed. —Interest Dividends from it. — ^Who are enti- tled to Participate. — Why the Company can pay Face Values of all Certificates without Burdensome Assess- ments.— Actual Cost to Members First Six Years. — Full Text of Certificate of Membership.— Full Text of the Trustee's Contract.— Table of Graduated Assessment Ratios. . * 151 CHAPTER XIV. Synopsis of the Massachusetts Law of 1885, on Assessment Insurance, by the Hon. John K. Tarbox.— His General Remarks on the same. — His Comparison of Assessment Insurance with "Old Line'* Insurance. — ** Co-operative Business," by Hon. John A. McCall, Jr., Supt. of the New York Insurance Department.— ** Catch Pennj^ Insti- tutions.*' — Resolutions of the Executive Committee of the Mutual Benefit Life Associations of America. — The Superintendent's Remarks on the same. — Co-operative Insurance, by the Hon. Ephraim Williams, Insurance Conmiissioner of Connecticut. — His Remarks on the Grouping of Different Ages for purposes of Assessments. 166 CHAPTER XV. Assessment Insurance Continued.— Proceedings of Tenth Annual Convention of Mutual Benefit Associations of America.— List of Societies and Delegates. — Annual Ad- dress by President E. F. Phelps. — Report of Executive Committee. — Address of E. B. Harper, Esq., with refer- ence to Fixed Dates for Levying Assessments. — Remarks on the same, by Dr. T. B. Campbell, of Wheeling, W. Va., and A. S. Brownell, of New York City. — Reports of Vice Presidents. — Discussion on various Topics, by Leading Members of the Convention. — Address of the Hon. Julius L.Clarke 17^ CHAPTER XVI. The Piogress of Life Insurance. — Article on Interest. — Inter- est Laws of the States and Territories. — Penalties for Violation of the same. — Explanation of the Tables. — Tables 190 INTRODUCTORY. INTRODXJOTION. The idea of publishing the work here presented did not sug- gest itself until much of the material that it contains had accu- mulated for the private use of the author. Since the organization of The Bureau of Life Insurance Information, in 1881, many letters have been received from different localities throughout the United States and Territories, and from Canada, asking for information. These letters cover a wide range of inquiry upon subjects involving the elementary principles of Life Insurance. To answer these much time and labor have been required. The following, copied at random from a few of these letters, will convey an idea of their general scope: 1. What in a Mortality Table, a7id where ran I obtain one? S, What is the difference, between the reserve and the surplus of a cmwpanyf S. Why is the dividend on a Life Policy larger the tenth, than %t is the fifth, year? 4. I have one policy that was taken out nearly thirty years ago, but the dividend this year is not so large as it was ten years ago. I have another that is only six years old, and the dividend has increased erery year. Why is this? 5, Why can*t Life Insurance be done the same way that Fire In- surance is? 0. Please explain Endowment Insurance. 7. What is Tontine Insurance? 8. What is meant by the expression, ** Actuaries' 4 per cent**? 9. Please explain the neic Massachusetts* Non- Forfeiture Law. 10. What do you think of the Ilomans plan of Insurance? Isn*t it Assessment Insurance in a netc dress? 11. Which is the best Assessment Company? 12. An agent tells me that the New York Non-Forfeiture law com- pels all Neic York companies to pay a definite 'amount, in ciish^ for a policy after it has been running three or more ye^irs. Please explain this, How does it differ from t?ie Massachusetts* law? 8 INTRODUCTORY. la, Ih there miy yood Attttetfument Ciyiwpauy that inHuen Endmrment Life Insurance polideff? 14. What is meant by ** TJie Expectatum of Life,'* aphrane vned HO often by Life Insurance tuen? 15. What are the s(ntrceM of diridends in the " Old Line** corn- panies? Why can*t we pay less for insurance, and not receive any dividends? 16. I want $10,000 life ifisurance to be paid for inteii years, as an estate to go to my wife and children after my deaUi. I also want $10,000 payable- to my boy, nmr six years old, when lie is twenty-one, or to a trustee for him should I die before he does; and I want $10,000 for the next te7i ttr fifteen years, the cheap- est insurance that can be had cortMsteiit icitJi security. Please give me the information necessary for an intellif/ent selecHtni of companies, and send bUlfor services. 17. An agent has been in to see me several time^ trying to insure me for $10,000 on what lie calls the ** The lieserre Addition'* plan, or ** The Accumulation" pla7i, I think it is. lam to pay for it in ten years, and he says tJiat at tlie end of nine- teen years I will receive the $10,000, in cash, if I live until then, but if I die before that time my trife will receive the whole amount. Do you think a company can do such a thing? Please answer in detail and send your bill. 18. If 1 insure for $10,000, and die the first year, hmc can a com- pany afford to pay my wife arid children Vie $10,000? I don't understand it. Please explftin and send charges. 19. What is an actuary? Do they have actuaries in fire insur- arice companies? SiO. I noticed in a recent issue of a Chicago paper your card adver- tising a Bureau op Life Insurance Information. As I am largely interested in Life Insurance I naturally desire to gain such information concerning this interest as may be of value to me. Tour reply intimatiiig what you may have to offer icill be appreciated by me. Enclosed find stamp. 21. How can an Assessment Company safely issue Endowment policies? 22. What are Reversionary Additions or Dividends? 23. What is the difference betioeen "Old Line" insurance and Assessment insttrance? Are not the principles upon which tliey are baaed the same? INTRODUCTORY. 9 £4. Is there any good Assessment Company that makes assess- ments only tfiree or four times a year^ at stated fixed dates f • Please reply. 26, Why are the "Old Line" called ** Level Premium*' companies? 26. WJiy is it necessary that so many of the Mutual ** Old Line*' companies have so fnuch vnoney ** in reserve" as they callitf If they are Mutual, why don*t they pay back to their members this money, and not pile it up to be preyed upon, perhaps, by avaridovs officers? I don't understand it. Please explain. 27. Wliat is a **^ natural premium "? 28. I have had a policy in the Company for nearly sixteen years, and I asked what they would pay msfor it, in cash, and they won't pay a red cent! They say that they are selling insurance^ not buying it. (This gentleman describes his policy -^tells how much he has paid on it, in cash, and wants to know if it is worth anything.) The above extracts from a few of the thousands of letters re- ceived, during the last four years, sufficiently indicate the eager- ness with which the general public are seeking impartial and reliable information on the subject of life insurance. One object, therefore, in the publication of this book, was to more fully supply this demand, and, at the same time relieve the office, possibly, from a large amount of correspondence on •certain topics. Nearly every question given above is answered in this book more completely than could be done by letter, and at much less expense to the correspondent; besides it gives much additional information that could not possibly be com- municated in one or fifty letters. The book has been written from an absolutely impartial stand-point, as the reader will readily perceive in the perusal of its pages, and therein consists one of its principal merits. The Three Systems of Life Insuranoe find expres- sion in the different conditions, tastes and surroundings of the insured and the insurable, in every community. They exist, be- cause there is a demand for them. One person desires cheap insurance combined with Invest- ment. The investment is the principal idea. He would not take the insurance, no matter how cheap, without the investment; but t^ secure the investment, he will accept the insurance. This man represents a large class in every populous community. The Level Prenaium System, with its Endowment, Tontine, and Semi-Tontine policies, by whatever names designated, supplies 4^he demand. 10 INTRODUCTORY. Another wants Life Insurance as an estate. He thinks that every one who has a family to support, ought to indemnify them against possible loss, and consequent suffering, by his death.. He does not regard life insurance as an inveatment. Indemnity first ; an estate, afterwards, are the leading ideas. He be- lieves that he can take care of his family while he lives, and, if the payments b« limited to ten, fifteen or twenty years, he can pay for such a policy during the productive period of his life. He wants a good policy contract; one that will be Non-Forfeitable and incontestable, after a certain number of years. If he were to become a lunatic after the payment of several premiums, and were to commit sui- cide, perhaps, he does not want to involve his family in a lawsuit with a rich corporation. If from reverses in business he were to become despondent, and dissolute in his habits, he does not want hisieservesin the company's possession confiscated. He wants a policy -contract — and he will accept no other — that, after the payment of two or three years' premiums, in cash, will be, toith- aut further stiptUation or negotiation, good for a certain amount of paid-up insurance covering the whole period of life; or, one that will be extended for its full face value until the reserve has been exhausted in payment for such extension. Dividends with him are of secondary consideration. This man represents a very large class, and its demands must be responded to. If a selection of companies be wisely made. The Level Premium System, with its 10, 15, or 20 annual payment life policies, fully supplies the demand. There is another who represents a different class from those already mentioned. He wants life insurance; believes in it, but thinks that he can handle his own money better than any in> surance company can handle it for him. He can make his own investment8i &s he expresses it. He wants pure insurance, for a definite amount guaranteed in the policy, without any *' ifs*' or "provideds" about it, and he wants it for only the productive period of his life, and it must be cheap. He prefers to pay for it, quarterly, in advance. When he pays his premium, he wants to know how much he is paying for insurance; how much for expenses, and how much for contingencies. He is willing to pay an equitable amount, from quarter to quarter, for a definite amount of insurance, including expenses and contingencies, but not one penny, additional, to accumulate in the treasury of the company, and that can not be used, if necessary, in payment of current death claims. He is willing to pay for such insurance at an increasing cost from year to year, as age increases. To this demand from a very numerous class. The Natural Premium System responds. And there is yet another who represents an entirely different class. Neither of the two systems named conforms to either his. INTRODUCTORY. 11 ideas or his purse. He wants to pay for a thing when he get» it ; not before. The idea of fifty or a hundred, or several hun dred individuals, more or less, associating themselves together in a kind of society, or brotherhood, and, whenever one of their number dies, each of the remaining members to pay a certain sum named to the bereaved family, this plan of insurance, as he calls it, seems to commend itself to him. They may all be engaged in the same occupation, conductors, engineers, &c., &c.; or, they may be employed in the different departments of the same corporation, or of similar corporations in different parts of the country ; or, they may be members of the same secret society, board of trade, or produce exchange, and, although no definite sum is named to be paid to the widow and children of a deceased brother, yet each contributes what he had pledged, when the emer- gency occurs. Such societies exist in response to the demands of a very large class of respectable people. They are called assessment sooieties. It is true that not one scientific prin- ciple upon which sound life insurance is based— except that of association— enters into the organization of this kind of socie- ties ; but in thousands of instances the contributions, thus made, have paid all the funeral expenses, and a very considerable sum has been left with which to provide shelter, food, fuel, and clothing for the bereaved family ! Who can have a heart so pulseless and cold as to not feel glad that the otherwise shelter* less, homeless., penniless, widowed mother, and the fatherless- children have thus found relief, though it be but temporary, through the benefactions of these most primitive assessment societies ? In some of them are to be found well to-do men. Many of them are insured in other organizations, and in the Level premium companies, but they have become members of these societies, mainly, in a great many instances, to help and encourage those who are not able to pay for any other kind of indemnity. Among them are foremen of the different departments of large manufacturing establishments, and, not infrequently, the manufacturers and the railroad officials themselves. There is another oIbbb of ajssessment sooieties that haa been organized on quasi scientific principles. A mortality table, or the rates of some Level premium companj', icas consulted; but, in a large number of cases, the leaders who took the initiative in the organizations, were not sufficiently familiar with the sci- ence of life insurance to know how to utilize them. The mem- bership is separated into classes, according to their ages, each class including several ages. ** Once in a class always in the same class," is their motto, and the assessment for each death is never to be increased. This distinctive feature is kept well in the foreground as one of the reasons for becoming a member. **Your assessment will never be increased." The reason given 12 INTRODUCTORY. by one of this class, for not increasing the rate of assessment, as the age increases and consequently the cont, is the following : ** And as they advance in age t?ie cost to a member does 7iot in- crease, for every deatfi in iJie ranks is replaced by a vigormis young member, and the arerage mortality forever remains about the same." The organizers of this class of societies did not seem to com- prehend the fact that when a member was classified at age 60. for instance, with a permanent rate of assessment at, say, $1.80 for each death, he might live to be 75, when the cost of carrying him would be more than three and a half times as much as when he entered the society. It is at this class of societies that the Level premium companies have fired their most effective missiles, and with the most fatal results. Hundreds of them have run for a few years and then retired, the direct results of unsdentiflc rating. Such societies may be found all over this country, strug- gling to perpetuate an existence. Their efforts remind one of an attempt to build a high tower, at an angle of thirty-three and one-third degrees off the perpendicular. Such a tower may be l)uilt, quite high, if the base be broad ; but, if continued, after a time the center of gravity will fall outside the base when the structure will tumble ; not necessarily because the workmen were inefiScient, nor that the bricks and mortar were of bad materials, but because they were building against the great law of gravita- tion. It might be propped up for a time, and the work of con- struction be continued, but eventually the structure will fall to the ground, a shapeless mass of bricks and mortar. Thus has it been, and it always will be, with this class of assessment socie- ties. When one of these has been in existence long enough for its center of gravity to fall outside its base, it has tottered, reeled, and then fallen to the ground. They have fallen like dead leaves of the forest before the autumnal blasts ! There is nothing known in the whole range of life insurance mathematics and experience that can compensate for such unscientific rating. New blood can not do it. It may postpone the day of retribu- tion, for several years, even, but it is sure to come. It is the pen- alty for violation of the great law of mortality, that pervades the •entire human family. During the last ten years a few scientific men have been inves- tigating the subject of assessment insurance. These, together with others who possess large business capacities, have wrought a wonderful improvement in the system, as a system. The question has finally taken shape in the Convention of Mutual Benefit Life Associations of America. This convention, at its last session, adopted a series of resolutions which resulted in the appointment of L. G. Fouse, Esq., of Philadelphia, Pa., to prepare a standard of rates. Through the politeness of this INTRODUCTORY. 13 gentleman, proof sheets of his report have been placed at the disposal of the author, portions of which will be found in the following pages : Under the existing insurance laws of the States, no assessment company or society can absolutely guarantee payment of the full face value of its certificate without making itself liable for the same reserve, from year to year, as is required under the Level premium system. As a matter of fact it cannot guarantee any^ definite sum, in dollars and cents, without assuming a cor- responding liability of reserve. And this is as it should be. These societies may be able to pay the full amount named in their policies or certificates, and some of them Jtate done so, since date of organization, but they cannot agree to do so, in their policy contracts, for reasons stated above. The question before the National Convention above alluded to, seems to be, substan- tially this: ffow can we grade our rates and adjust our machinery so as to pay the full face value of our certificates without being liable for Level premium reserves? If the report of Mr. Fouse be adopted, by the National Convention, assessment insurance will have made a giant stride in the right direction . It is not the province of this work to advocate any one system of life insurance to the exclusion of the others. Its purpose is to portray the characteristic features of the three systems, and to point out the requisites for soundness and permanency as dictated by scientific and recognized business principles. No comparisons are made except to define technical terms, and to illustrate principles. The examples of real policies used quite freely are for the sole purpose of illustration, and, in order to avoid the very appearance of favoritism the names of the com- panies that issued them, and, also, of the persons insured by them, are purposely omitted. Considerable space is occupied in explaining the Tontine, and Semi-Tontine forms of insurance, under The Level Pre- mium System, and the more scientific forms of The Assessment System, because there seems to be at the present time, a demand for unbiassed and reliable information on these subjects. Tontine insurance has been vigorously assaulted through the leading press, east and west. Mr. AVolcott, of the Ohio Senate, expresses it in the preamble of his resolutions, calling for an in- vestigation of the subject, as follows: "Whereas.— Complaints for several years past have become general in Ohio, against the inequitable and unjust plans and methods of the Tontine insurance business as conducted by such companies foreign to Ohio ; and, ** Whereas. — The leading journals of this and other States have recently made startling exposures, if true, of such plans and methods, which are most unjust to policy-holders in su' h companies; and ** Whereas.— Legislation seeking to arrest abuses and to protect the people of Ohio has been instituted by this general assembly; 14 INTRODUCTORY. now, therefore, for the purpose of aiding such legislation and furnishing necessaiy information to the insurance department of Ohio as a basis for future legislation, Be it Resolved, d'c.^ d-c." The resolutions, in full, asTvell as the committee's report after it had completed its examinations, may be found in the following pages : Considerable space has also been given to the discussion of the Massachusetts' Non-Forfeiture law of 1881. There seems to exist a difference of opinion with reference to the cash-surrender value feature of this law. A correspondence was therefore had with all the Massachusetts companies, and with the Hon. Elizur Wright, with reference to that particular feature of the law. This correspondence is both interesting and instructive, and it has been given, therefore, to the readers of this book, together with several assumed examples of policies illustrating the general features of the law. As this book has been written mainly for the public in gen- eral, extreme care has been exercised in the use of technical terms. If forced to use them they have either been fully de- fined in precedmg pages, or they are explained where used. Such expressions as Actuary, Reversionary Dn^roENDS ; Actua- ries* 4 PER CENT.; American 4 per cent.; Net Value of a policy; Legal Reserve ; Tontine, 8emi-Tontine, &c., &c., fire defined in their appropriate places. The attention of the reader is called to the analysis of Endowment Insurance, in Chapter lY, commencing on page 31. The Endowment is a very popular form of insurance, because it provides indemnity in a double sense ; indemnity to the family or other beneficiary, in the event of the death of the in- sured within a specified period of time — usually ten, fifteen, twenty, or twenty-five years— and indemnity against possible want and suffering at some future time growing out of financial •embarrassment. Much the larger portion of the payments made •on an endowment policy is guaranteed to earn compound inter- est, whether the insured die during the endowment period or live until its expiration. This subject is fully illustrated by assumed and actual examples of policies. The article on Life Insurance Failures, page 54, taken from •a pamphlet entitled **Life Insurance," &c., published by the Globe Newspaper Company, Boston, is worthy of careful perusal. The Article on Life Insurance Expenses, page 56, by which the expenses of life insurance companies are compared with those of fire insurance, and railroad corporations, will be a sur- prise to those who are not already familiar with the facts. Chapter VI, page 59, commences the analysis of The Three Systems of Life Insurance, beginning with the Level Premium system. In this and the following chapters the INTRODUCTORY. 15 distinguishing characteristics of the Three Systems are discussed, together with the requisites for soundnesss and PERMANENCY. The reserte in the Level Premium System; the reserte in the Natural Premium System, and the reserve in the Assessment System, are, each, plainly defined, so that any one of ordinary intelligence may not only understand them, but also detect their differences. The reserve in The Level Premium System is entirely different from that in either of the other two systems. It means accumulation It cannot be used in payment of current death claims. It constitutes more than ninety per -cent, of the entire assets of all The Level Premium Com- panies. The reserve on a policy in The Natural Premium System is at its maximum at the beginning of a policy year, and entirely disappears at the end of the year. It is all used in pay- ment of death claims during the year, but it must be used gradu- ally. In The Level Premium, and The Natural Premium Systems, insurance mathematics and insurance laws define the nature and prescribe the amount of their respective reserves. The mathematical and legal tests are rigidly applied to all policies, in force, at least once every year, by the Insurance Departments of the several States in which these companies are doing busi- ness. But the reserves in The Assessment Companies are en- tirely voluntary on the part of the societies themselves . They can provide for a reserve, as the better class of them do, or not. It •can be used in payment of current death claims, at any time and in any amount, even to the entire exhaustion of the fund itself. "There is at present no statute on the subject. Not only are the functions of these different kinds of reserves •discussed in the chapters alluded to, but also the other elements -entering into the formation of a level premium. The Tables, some twenty five in number, are a very prominent and useful f eattire of the book. The Actuaries', and the American Experience Tables, are given in full, with additional columns, in each, showing *'Per cent, of Deaths to the Living"; ^^Expectation of Life"; *^ Level Annual Premium to Insure $1,000 for Life"; and ** The Natural Premium to Insure $1,000, one year — ages 10 to 100, in the Actuaries', and 10 to 96 in the American. In addition to the usual compound interest tables, will be found several new ones, aud also a table showing the amount of $1 per Annum, for 50 years, at simple interest. The several articles on Interest; Mortality; How Mor- tality Tables are Construoted ; the Reserve Element, The Mortality Element, and The Expense Element of a Level Premium; The Sources of Dividends, and The Sev- eral Non-Forfeiture Laws of different States— together with other valuable information, constitute a popular treatise on the subject of life insurance, for which there has existed, for a long time, an increasing demand. CHAPTER I. Fire Insurance.-— Life Insurance.— Man as Productive Capi- tal.— That Business Block. — The Successful Capitalist. — The Young Business Man. — ^The Law op Mortality. — How Mortality Tables are Made. — The Two Tables Used Most Extensively in America. Fire Insuranoe is protection against loss by fire, and it is based on the productiveness of the property insured — present or prospective — and the possibility of its destruction by fire. Life Insuranoe is protection against financial loss by death, and it is based upon the productiveness of the person instired — present or prospective — and the absolute certainty that he will die. A healthy body, a strong will, an active brain, and a natural aptness for business are the most productive property in the world. It has been said that when time was young, only two human beings lived on this earth. They lived in a garden, and fig leaves were their clothing. There were no business blocks, no railroads, no banks, no palatial residences, no trade, no com- merce, no money, no art, no science, no culture — no material uealth. All of these have since been produced by the brain of man. One generation after another has lived and passed away, each contributing something to what now constitutes the wealth of the world I One hundred years hence every man, woman and child now living will be dead. The exceptions only prove the rule. Man, truly, is very productive, and there is nothing more certain than that he will die. Tour annual income on that business block is $20,000, more or less. You keep it well insured. You even have the rental insured. Not because if it were to bum your family would be paupers, or that you would experience other than slight incon- venience from it. It is productive property, liable to bum, and it is business like to protect such property. If you owned a thousand such blocks you could assume the risk, yourself; but you own but one block, and you can no more afford to carry the risk on one block than you can afford to carry one letter to San Francisco for two cents. The companies can carry the risk be- cause they are carrying the same kind of risks on thousands of 18 THE THREE SYSTEMS Other blocks, and their receipts from all pay the losses on the few that burn, and there is still a margin left for profit. Your block earns a handsome income. Tou produced the block. Which is the more valuable property, you or the block? Which is more liable to perish ; the block by fire, or you by death? Which would be attended with the more disastrous con- sequences, in a strictly financial sense ; the destruction of the block by fire, or your death, in the next thirty days? Would the destruction of the l)lock. uninsured, impair or incumber the value of your other property' ? With no insurance on yourself, would not your death, within the next thirty days, impair the value of your estate at least twent j'-five to fifty per cent. ? The average duration of a class of lives is certain, but there is no certainty of the duration of one life. When you have your buildings and mer- chandise insured, you protect yourself against what may occtir ; but, when you have yourself insured, you protect your family against what must occur. Fire insurance is protection against a possible calamity; but life insurance is protection against an absolutely certain calamity. One may possess those very rare and indefinable qualities of mind that always insure success. Everything he touches changes to gold dollars and a great many of them. When he purchases stocks, they are at the lowest; and when he sells, they are as mysteriously at the highest Under his magic touch wealth increases, he hardly knows how, so natural is it for him to con- trol the wealth producing elements that surround him. When his plans ripen, they stand out in bold relief, emphatically his own, and are tenaciously carried out to a generally successful issue. He seems to be impelled by a force which he has no power or inclination to resist. He loves to watch the mental ma- chinery within, working so admirably, and, with rare exceptions, accomplishing desired results. But this valuable machinery will not always last. His grasp of the lever will be gradually loos- ened. He will trust to others what he once thought could only be done by himself, and he thought rightly. At this junc- ture men of princely fortunes, by one single misstep, have lost all. Some of our wealthiest men, conscious of this approaching epoch, have "hedged," by investing largely in life insurance. There are other younger business men, whose fortunes are not yet made, and who, utilizing the experiences of others, have in- vested quite extensively in Endowments, Tontines, Semi-Tontines and other forms of Life Insurance, paying for them during their present productive periods of life. These insurances, in the event of premature death, will constitute an estate, together with other accumulations, as large, probably, as if they had lived their full measure of days. These young men have learned that men die, and that they sometimes die in the full strength of manhood, when their prospects are the brighest, before their well matured . OP LIFE INSURANCE. 19 plans have had time to work out expected results, and just when they have reached the threshold of success. They have seen such untimely deaths bring financial loss, and sometimes utter ruin, to bereaved families. It was like the freighted ship sinking in full view of the safe harbor ; or, the costly building going up in smoke and cinders ! These representatives of American enterprise are hopeful, for they have reasons to be, but there still remains a period of uncertainty between hope and accomplished results, and they have thus bridged it over by the only method known and approved by the best intelligence of the nineteenth century. THE LATV OP MORTALITY. "Mortality," says Dr. Southwood Smith, "is subject to a law, the operation of which is as regular as that of gravitation." Mr. Babbagre says: "Nothing is more proverbially uncer- tain than the duration of human life when the maxim is applied to an individual ; but there are few things less subject to fluctua- tion than the average duration of life in a multitude of indi- viduals." Mr. "Walford says that the average duration of life in Great Britain at the present time— 1867 — is 41 years ; in France 40 ; in Sweden, 39; in other countries progressively downwards until the average throughout the world is found to be only 33 years. In Rome, thirteen hundred years ago, the average was much the same as in England now. We know, however, that the duration of life at all ages has increased considerably during the past cen- tury. Amongst the nobility and gentry of England, the expecta tion of life at the age of 84, is found to be four years ; and, amongst the poor fishermen of Ostend it is precisely the same. Mr. Walford closes his remarks with the following remarkable statement: ** We have the very best of authority for stating, while the mortality of all the other epochs of life is affected b}^ country, by station, and by a multitude of influences arising out of these and similar circumstances, the concurrent evidence of all observation shows that at this, and the like advanced ages, the mean term of existence is nearly the same in all countries, at all periods, and amongst all classes of society." The Hon. Elizur "Wrigrht, in his fourth annual report to the Legislature of Massachusetts, says: "Observations on the population of particular localities, and of entire nations, on annui- tants who have the strongest pecuniary motive to live, and who have often been selected for their strength of vitality, and on insured lives that have an almost equally strong pecuniary motive to die promptly, have resulted in scales of decreement differing 80 little from each other and from a regular curve, that one must 20 THE THREE SYSTEMS be profoundly skeptical not to believe in the existence of a per- fectly graduated scale, curve or law, which nature works after as her pattern or type." MORTAIilTT TABIiSa The Mortality Table is the foundation upon which the science of Life Insurance is constructed. Without it the business would be entirely speculative. "Tell me a man's companions and I will tell you his character, "says a distin^ished writer ; and the same author also says : "Tell us the Mortality Table upon which an Assurance office is based, and it is equally possible — always assuming the existence of sound management — to predict its financial position and relative advantages." A mortality table is made by observing the operations of the Law of Mortality as shown by the number of deaths at all the different ages in a province, kingdom, country or among insured lives, and then collating, analyzing and adjusting the results so obtained. The process of adjustment or graduation is upon the same principle that astronomers *' reduce" as it has been termed, their observations to some common event or epoch. It is getting rid of a periodical cause of fluctuation and presenting a result not as it was observed, but as it would have been observed had that cause of fluctuation had no existence. Mr. Walford illustrates it substantially as follows : Between the ages of fifteen and twenty -five, and even up to later ages, the mortality is kept down in large towns by the in- flux of healthy people from the country. Thus, in the city of London, the annual mortality amongst young women between the ages named, is only six per one thousand; while in the sur- rounding counties it is seven to eight per one thousand, and amongst young men in London, at the like ages, it is eight per one thousand. The solution is found in the fact that healthy young women go trom the country into London and other large towns, obtain situations, and, if taken sick, go back into the country to die. The effect is to make the larger towns look more healthy than the country, at these ages. Mortality tables con- structed upon extensive data from town and country life would not be materially affected by such fluctuations ; but those based upon town observations, only, are certain to be more or less so, unless subjected to the processes of adjustment and graduation named. The mortality tables almost exclusively used in the United States are : 1. The Aotuaries', or Combined Experience Table. —This is based upon the recorded experience of seventeen Eng- lish Life Companies. It was deduced from 83,905 insured lives under the superintendence of a committee of distinguished actu- OF LIFE mSURANCB. 21 aries appointed for that purpose, on the 19th day of March, 1838. The table was first published by Actuary Jenkins Jones in 1843. 2. The Axnerioan Experienoe Table.— This table was constructed by Sheppard Homans, Actuary of The Mutual Life Insurance Company, of New York, from 1856 to 1871; author of "The Contribution System of Dividends/' and, at the present time, President and Actuary of ** The Provident Savingrs Life Assurance Society of New York." The table is mainly based on results obtained among insured lives in America, but all the standard European tables were used in the processes of adjustment and graduation. 22 THE THREE SYSTEMS CHAPTER II. Actuary. — Assets, —Brokerage. — Oommissioms. — Stock Com- panies. — Mutual Companies. — Mixed Companies. — Con- tribution System of Dividends. — Cash Dividends. — Re- versionary Dividends, or Additions.— Expectation op Lite.— Forfeiture.— Lapse.— Loading.— Loss.—MoRTALiTY. AoouznulatiOD. — When used in the *' Level Premium Sys- tem," it means either *' reserve accumulation" or *' dividend accumulation." For a full explanation of the former, see pages 61 and 62. '* Dividend accumulation" occurs when a policy holder, instead of using his cash dividends in part payment of premiums, leaves them with the company until some designated future time, when he can draw them out in one sum, together with the interest earned. When used in the "Natural Premium System," or in the ** Assessment System", of Life Insurance, it means a mortality fund, gradually increasing from year to year, in excess of what the mortality table indicates as necessary, to be used, however, in payment of death claims, if needed; or, to be drawn out by the insured at some designated future time ; or, to be applied in part payment of future premiums or assessments ; or, applied in some other way designated in the policy or certifi- cate of membership. The accumulation of such a fund is a wise precautionary measure by which the membership are held to- gether, or by which death claims may be paid, that might be suddenly forced upon the company on account of excessive mor- tality from epidemics, etc., etc. Actuary. — One who is proficient in that branch of Life In- surance, which is strictly of a scientific and mathematical nature. The Actuary of a company makes the rates, at all the ages, for $1,000 of insurance on the different kinds of policies issued by that company. These rates, when published in book form, are called the "rate book," and, by consulting it one can ascertain how much it will cost, the first year, for any amount of insurance desired within the company's limit. The Actuary also calcu- lates how much cash dividend his company may safely pay to each policy-holder at the next approaching policy anniversary. When a policy-holder desires to surrender his original policy for a smaller amount of paid up insurance ; or, for cash ; or, in ex- OF LIFE INSUBANCB. 23 change for some other kind of a policy, the Actuary is con- suited, and it is he who determines, subject to the approval of the board of management, what shall be done. It is the Actu- ary who, from time to time— once every year, at least— mtovma the company how much "reserve accumulations " it must have in hand to meet the requirements of law, etc., etc. A State Actu- ary, or the Actuary of The Insurance Department of a state, receives his appointment from the department, and his services are employed in this way : When a Life Insurance company desires to do business in a state in which it has not been operating, it makes application to the Insurance Department of that state for admission. It is then required to send to the de- partment a schedule of all its policies in force, giving, in detaU, the age^ of every policy-holder when insured ; also, the date, amount and kind of policy. This schedule is given to the Actu- ary of the department, who is required '*to vaXtLe" as it is called, every policy described therein, according to the Table of Mor- tality and rate of interest adopted by the state as its standard of valuation. The valuing of a policy consists in ascertaining how much its " reserve accumulation" must be, at a certain date, — gen- erally, December 31 — , to comply with the requisitions of law. When every policy is thus valued, the different amounts thus obtained are added together, and the total am^ouvt constitutes what is called the '* policy liability " of the company ; to this are added the other liabilities, — admitted, but unpaid death claims, matured endowments, etc, etc. — , and the result shows the ** total lial)ility" of the company Then this total liability is critically compared with the company's ''gross assets." If the results prove satisfactory to the department, it issues a license to the company to do business in the state. If at any time the Depart- ment of Insurance become suspicious that any Life Insurance company doing business in the state is not sound, it can demand another examination as thorough as if the company were apply- ing for admission into the state for the first time. The policies of all Jiome companies have to be valued every year by the State Actuary. In various other ways the services of a competent actuary are made very useful to the department and beneficial to every policy-holder in the state. Assets. — All the available funds and property of any kind belonging to a Life Insurance company. These are closely scru- tinized by the Insurance Department of every state. Companies admitted to business are required to report to the department, on the 31st of December of every year, not only the amount of its assets, but also the minutest details of the same, and these reports must be sworn to. Brokeragre. — A percentage paid to an agent or solicitor, by a company, on the first year's premiums, only, of policies obtained by him, in lieu of future commissions on renewal premiums. d4 THE TUBEE SYSTEMS Oomxniasions.— A percentage paid to an agent or solicitor on all premiums of policies obtained by him, for a specified num- ber of years. Ooxnpany, Insurance.— There are three kinds of Life In- surance companies: Stock Companies, Mutual Companies, and Mixed Companies. A Stock Company has for its basis a capital stock. The stockholders elect a board of directors, and they the officers who conduct the entire business of the company under the direction and supervision of the board. The rates charged for insurance are, nominally, lower than in the other companies. Policy- holders would pay less in a stock company than in most mutual or mixed companies, for the first few years; but, as all the margins and profits made in a stock company go to the stockholders, there are no dividends to reduce their premiums, so that after having been insured tov fifty years, they still have to pay the same pre- miums as at first. But some so-called stock companies are really mutual. They organize on the basis of a nominal capital, so as to secure to the stockholders the control of the business, but in every other respect they are mutual companies, giving all the profits of the business, over and above what is necessary to run it, to the policy-holders. A Mutual Company is one that is nominally controlled by the policy-holders, themselves. Every policy-holder has the right to vote, in person or by *' proxy " in the election of a board of di- rectors. The largest and most successful Life Insurance com- panies on the globe are mutual companies, and their policy- holders have always had the right to vote at their annual elec- tions ; but their success and their present proud positions iif the insurance world are owing to the fact that, from first to last their business has been largely controlled by a few men who have proved themselves equal to every emergency that has arisen, and faithful to the sacred trusts confided |p them by the proxies of a numerous, intelligent and appreciative membership. The same can be said of other but younger companies that are rapidly coming to the front, and, juniors though they are and must always be, they even now claim superiority in some things over their seniors. In a strictly mutual company, the dividends are paid to its policy-holders, from whatever sources they may arise. The system is a popular one. It seems to possess certain ele- ments of success not found in either the stock or the mixed companies. A Mixed Company is one that does business, nominally, on both the stock and the mutual plans. It is neither a purely mutual company, nor a strictly stock company. It is based on a stock capital, and therefore the policyholders have nothing whatever to do with its management. Policy-holders who insure OF LIFE INSURANCE. 25 on the stock plan receive no dividends ; those who insure on the mutual plan receive dividends. Contribution System of Dividends.— This is a system by which the surplus of a company is distributed among its policy-holders, from year to year, according to the amount that ^ach one of them has contributed to produce it. It was a won- derful discovery, and its authorship is conceded to the two emi- nent American Actuaries, Sheppard Homans and D. Parrs Fackler; the former, now President and Actuary of The Provident Savings Life Assurance Society, of New York ; the latter, Consulting Actuary for several of the leading Life Insur- ance companies of that and other states. The merits of this sys* tern of distributing surplus is shown by the fact that all the Life companies in the United States — we are not aware of a single exception— have adopted it. Before its discovery a policy- holder thathad'been insured in a company, twenty years, received no larger dividend, other things being equal, than did one who had been insured but five years. By this system, the older the policy, the larger the dividend. A policy holder whose reserve accumulation in the hands of the company is $1,000, receives, from this source, ten times the amount that another would receive whose reserve accumulations were only $100. Dividend. — For a full explanation of Cash Dividends, See pages 65—68. *' Reversionary dividends," or ** re- versionary additions" as they are sometimes called, are paid up insurances purchased from year to year by cash dividends. To illustrate : Suppose one is insured on the ordinary Life plan, in a ** Level Premium Company," and that his cash dividend, &t the end of the first year, when he is thirty-five years old, is $38.54. This dividend could be used in part payment of the pre- mium, just due; but, instead, he applies it to the purchase of paid up insurance. It would purchase, in some companies, exactly $100 of such insurance, payable when the original policy is pay- able— at death. At the beginning of the next year he starts off with the original policy, on which he is to pay premiums every year as long as he shall live, and he also has a little policy of $100 upon which he will never have to pay any premiums, and from which he will receive little dividends, probably, every year. Suppose he does the same next year, and that his cash dividend is then $39.31. He is now 36 years old, and although the dividend is a little larger than it was last year, he is one year older, and it will purchase only $100 of paid up insurance. The rate is higher at 36 than at 35. Suppose, at the end of a policy year, when his nearest age is 55, his cash dividend is $58.74. Because of his increased ai^e, this much larger dividend will purchase only $100 of paid up insurance. At age 70, it would require a cash dividend of $76.60 to purchase $100 of paid up insurance. These several amounts of paid up insurance, pur- 26 THE THREE SYSTEMS chased by the cash dividends, are called *' reversionary addi- tions" or ''reversionary dividends." Expectation of Life.— A term applied to the mean or average duration of the future life of a person, at any age, accord- ing to a given table of mortality. Forfeiture.— The violation of some of the conditions of a policy, which gives a company the legal right to cancel its policy contract with the insured. Lapse.— See Chapter VL Loading'— A percentage added to the '* net premium" for defraying the expenses of a company and to provide for a possi- ble excess of mortality. Loss. — A legal claim against a company arising from the- death of one of its policy-holders. Matured Endowments, ma- tured Tontine policies, and other policies partaking of the nature of Tontines, strictly speaking, are not losses. Mortality. — Having a given number of persons of the same age living at the beginning of a year, the mortality is the num- ber dying during that year. The rate of mortality is the ratio of the number dying, during a year, to the number that were living &% the beginning of the same year. OF LIFE INSURANCE. 27 CHAPTER III. Policy. — Single Payment Lite, with Example. — Five-Pat- MENT Life, with Example.— Ten-Payment Life, with Examples (1) and (2). — Fifteen- Payment Life.— Twenty Payment Life.— Ordinary Life, with Example. — Term Life. — ^Renewable Term Life. — Quarterly Renewable Term Life. Policy. — A contract between a Life Lisurance company and one of its policy-holders, containing the terms and conditions on which the former indemnifies the beneficiary, or beneficiaries, named therein, against financial loss in the event of the death of the person insured; or, by which the company agrees to pay a cer- tain sum of money when the insured shall attain a certain age. It is not possible here to even riame the different kinds of policies issued by the companies doing business in this country. The following are the most common and popular forms : Single- Payment Life.— This is a policy that is payable at the death of the insured, only. All the premiums are paid in one, single sum. If issued on the Stock plan, no dividends ; if on the Mutual plan, dividends are paid by the company to the insured every year during life. For $1,000 of insurance, at age 40, the Stock rate is, say, $367.70 ; Mutual rate, say, $430.19. Example. — Policy No. 29,342 ; amount, $10,000 ; date of issue, April 8, 1863 ; premium, $4,077 ; age, 38. The annual cash divi- dends were used to purchase additional insurance. When the policy had been in force sixteen years, the " dividend additions " amounted to $6,020. Had he died, at that time, his estate would have received. $16,020.95, less $547.57!! Five- Annual Payment Life.— This policy is payable at the death of the insured only. The premiums are required to be all paid during the first five years. If issued on the Stock plan, no dividends ; if on the Mutual plan, dividends are paid to the in- sured every year during life. For $1,000 of insurance, at the age of 40, the Stock rate is, say $75.87 annually ; Mutual rate, say $101.16 per annum, for five years only. Example. — Policy No. 32,247 ; amount, $10,000 ; date of issue, June 4, 1864 ; annual premium, /or five years only, $953.80 ; age, 39. His cash dividends, during the first fourteen years amounted to $2,257 34. After the first five years they averaged $100 per 28 THB THREE SYSTEMS annum. The cash dividends, during the first eight years, were used to purchase additional insurance. From the eighth to the fifteenth year, inclusive, he gradually converted the additions from former dividends into cash and used it, together with the accruing cash dividends, in payment of premiiuns in the same company on another policy, and still had left at the end of 1878, additions amounting to $334. He had thus paid $2,296.23 in premiums on the other policy ! This policy can never be dupli- cated even by the company that issued it. Ten- Annual Payment Life.— This policy is payable at the death of the insured only. All the premiums are required 1o be paid during the first ten years. If issued on the Stock Plan, no dividends: if on the Mutual Plan, dividends are paid to the insured, every year, during life. For $1,000 of insurance, at age 40, the Stock rate is, say, $47.43, per annum; the Mutual rate is, say, $59.17, per annum. Example 1.— Policy No. 17,114; amount, $4,000; date of issue, Augrust 6, 1856; annual premium for ten years, only, $180.02; affe, 31. The record of this policy from 1856 to 1878, inclusive — twenty-three years — is as follows: Total premiums paid dur- ing the first ten years, $1,899.20. The cash dividends were all used to purchase additional paid-up insurance. This addi- tional insurance, thus purchased, amounted to $2,990.20 at the end of the twenty -second year I Had the policy then become a claim, by the death of the insured, his estate would have re- ceived from the investment $6,990.20. He had paid the company less than $1,900. These results can probably never be duplicated, as the period from 1856 to 1878 was an exceptional one for large dividends in all the companies, owing to the high rates of interest received on their reserves. Example 2.— Policy No. 46,036; amount, $1,000; date of issue. May 22d, 1869 ; annual premium, for ten years^ only, $52.72 ; age, 86. The history of this policy, from 1869 to 1885, inclusive, — seventeen years— , is as follows: Net Annual Payments. $52.72 52.72 48.48 46.23 43.81 40.67 38.09 35.40 32.93 30.38 $421.43 Year. Annual Premiums. Annual Dividends 1869 $52.72 $00.00 1870 52.72 00.00 1871 52.72 4.24 1872 52.72 6.49 1873 52.72 8.91 1874 52.72 12.05 1875 52.72 14.63 1876 52.72 17.32 1877 52.72 19.79 1878 52.72 22.34 $527.20 $105.77 OP LIFE INSURANCE. 89 Year. Annual Dividends. 1879 $20.35 1880 21.95 I 1881 14.08 1-6 1882 10.53 1 2 1883 8.08 »o- 1884 8.16 2^ 1885 8.36 S £ o * $91.51 ^ Remark 1. — The company that issued this policy commences paying dividends at the end of the second policy year, when the third annual premium is paid ; so that, in the above policy, only eight dividends were available in payment of the ten premiums. These eight dividends amount to $105.77, and had they been equally distributed and used in paying the ten premiums instead of eight, the net gross amount paid would have been $421. 48» as shown above. Thus it is seen that the eight dividends, used as they were, were equivalent to a twenty per cent, reduction of premium, from first to last. Remark 2. — Since 1878 this policy has been a source of cash income. Dividends to the amount of $91.51 have already been received by the insured. The dividend of 1885 lacks only seven cents of being two per cent, of the entire cost of the policy, and the tendency is an increase hereafter. Remark 3.— The cost of such a policy in a Stock Company, at the non -participating rate of premium, would have been $474.80, or thereabouts, and no dividends/ Fifteen- Annual Payment Life. — This policy is made pay- able only on the death of the insured. All the premiums must be paid during the first fifteen years. If issued on the Stock plan, no dividends ; if on the Mutual plan, cash dividends during life. For $1,000 of insurance, at age 40, the Stock rate is, say, $35.05 per annum i the Mutual rate is, say, $45.29. Twenty- Annual Payment Life. — This policy is made pay- able only on the death of the insured. All the premiums must be paid during the first twenty years. If issued on the Stock plan, no dividends ; if on the Mutual plan, cash dividends during life. For $1,000 of insurance, at age 40, the Stock rate is, say, $30.10 ; the Mutual rate is, say, $38.65. Ordinaby Life. — This policy is made payable only on the death of the insured. Premiums must be paid during life. If issued on the Stock plan, no dividends ; if on the Mutual plan, cash dividends are paid every year — after the first or second — so long as the policy remains in force. For $1,000 of insurance, at the age of 40, the Stock rate is. say, $24.35 ; the Mutual rate is, say, $30.84. The rates are lower at younger, and higher at older, ftges, as is the case in all other forms of policy contract. ^ THE THREE SYSTEMS Example.— Policy No. 55,904; amount. $2,000; date, 1868; an- nual premium, $92.00; aj^e, 50. Repaid fifteen premiums amount- ing to $1,380, which, less dividends of $401.32, and premium loan of $288.68 (canceled), made a net payment or cost of $690.00, exclusive of interest. He did not pay the premium due in December, 1883 ; but instead of taking a paid-up policy for $563.00, he allowed his insurance to be extended for 4 years and 117 days, making in all 19 years and 117 days' insurance, at an average yearly cost of $17.85 per thousand. The party insured died in August, 1885, more than one year after the lapse of policy, which, howev(;r, was promptly paid in full by the company. Term -Life. — This policy is made payable only on the death of the insured within the term designated in the contract. The term may be one, three or six months ; one year, ten or twenty years. The policy contract may provide for renewal, at the expi- ration of the original term, on re-examination of the insured, and at advanced rate of premium, or not. This depends upon the practices of the company issuing it. A Term Life Policy is generally understood to be insurance for 10 to 20 years, with uniform annual premiums. No dividends; no paid-up insurance; no cash surrender value, and no insurance one minute after the designated term has ended. Renewable Term -Life. — One single company issues a Re- newable Term Life policy, as follows: Length of term, ten years, Uniform annual, semi-annual or quarterly premiums are required to be paid during the term. The policy contract is renewable after each term of ten years, at advanced rate, without medical examination, and the accumulated dividends of the last pre- ijeding ten years, if any, are applied to a uniform reduction of the next ten years' premiums. Definite provisions are made for paid up or cash surrender value, if desired, after the first three years. The annual rates for $1,000 of insurance are as follows : At age 20, $11.09 ; at 25, $12.64 ; at 30, $14.67 ; at 35, $17.36 ; at 40, $21.02 ; at 45, $26.14 ; at 50, $38.17 ; at 55, $42.66, and at 60, $55.64. The rates at intermediate ages are proportional. Several companies issue a Yearly Renewable Policy. For $1,000 of insurance, at age 40, the premium the first year is $21.19; the second year, $15.71; the third year, $15.99; the fourth year, $16.29, and so on, gradually increasing from year to year, as the insured becomes older. No dividends, no surrender value in cash or paid up insurance, Quarterly Renewable Term -Life.— Under this form of contract the policy is made payable only on the death of the insured within the term designated, and that term is three months. OP LIFE INSURANCE. 31 CHAPTER IV. Endowment Insurance —Questions Asked and Answered. — Assumed Examples. — Actual Examples. Endowment Insurance Policies.— These are issued in two ^general fonns— (1), Ordinary Endowments ; (2), Limited Payment EndO'wments. In an Ordinary Endowment, the policy is made payable to the insured in ten, fifteen, twenty, twenty -five, thirty or thirty-five years after the date, thereof, pro- vided he be then living to receive the money ; or, to his estate, or some beneficiary named, at the death of the insured, should it sooner occur. Premiums must be paid every year, less the divi- dends, if any, during the entire endowment period selected. For a Limited Payment Endowment the conditions of the con- tract are precisely the same, except the premiums must all be paid in a less time than that named as the Endowment period. To illustrate : A twenty-year Endowment may be paid for in ten or fifteen, or even five years ; or, a thirty-five year Endowment may be paid for in thirty, twenty-five, twenty, fifteen or five years; or, any of these may be paid for in one single premium. As these endowments, in our best companies, have proved to l)e compound interest investments combined with very cheap insurance — the insurance in some cases costing nothing at all — we have endeavored to make prominent these excellent character- istics in the following questions and answers : "Wliat is Endowment Insurance? It is Life Insurance for a limited time, usually ten, fifteen, twenty, twenty five, thirty or thirty -five years. It is something like Term Insurance, is it not? Yes, but in some respects radically different. In Term Insur- ance the policy is not paid unless death occurs during the term. Isn't the policy paid, in Endowment Insurance, if death occurs during the term ? Yes, or it is paid to the party insured, if living, at the end of the term, which is not the case in Term Insurance. Then, in Endowment Insurance, one does not have "to die to win," as the saying is? That's it exactly. In Ordinary Life Insurance, provided, 82 THE THREE SYSTEMS always, that the conditions of the contract are complied with, the policy liecomes a claim whenever death occurs. In Term Insuranoe, death must occur during the prescribed term or there is no claim, while in Endowment Insurance, the policy is paid at death, during the term ; or, to the insured, if living, at the end of the term. What is the cost of an Endowment, in comparison with other forms of Life Insurance? It is considerably higher. Why is it higher? Because Endowment Insuranoe is Term Insurance combined with a compound interest investment. To illustrate : We assume that you are thirty-five years old, that you are insured under a twenty year Endowment Contract, for $10,000 — annual payment, say, $485.80. By one of the conditions of the contract, you asrree to pay $486.80, every year, for twenty years, if you live ; but, if you die at any time during the twenty years, no further payments are required after date of death. The Company asrrees to pay you $10,000 if living to re- ceive it at the end of the twenty years ; or, to pay your lefiral representatives $10,000 soon after your death, if it occur within the twenty years. Referring to Table No. 12, we see that $256.50 per year, at six per cent, compound interest, will amount to exactly $10,000 in twenty years. You understand, therefore, that if you live until the maturity of the Endowment, and receive the $10,000" from the company, you will have made an investment of $256.50 per year and actually realized six per cent, compound interest on the money thus invested, for the time it was with the com pany. When the company contracted to pay the $10,000 at the time and under the conditions specified in the policy, it guaran- teed, absolutely, just such an investment to the extent of $256.50 per year. Nor was the guaranty alone conditioned upon your living and paying the premiums to the end of the twenty years ; but, in the event of your death at any date during the twenty years, all the conditions of the contract having been fulfilled by you, the guaranty was that as much money should be paid to your representatives as you would have realized had you lived to loan out $256.50 every year for twenty years, at six per cent, com- pound interest. This $256.50 of the Endowment Premium under consideration, is what we call the investment element. This amount, an- nually — or a larger sum, at a less rate of interest— must accumu- late with the company at six per cent, compound interest, in order that the company may meet its obligations qb the contract when it shall have matured. But you are paying the Company more than $256. 50 per year, and this excess is the cost of insurance. We assume that you are OP LIFE INSURANCE. 83 insured in a dividend paying company, and that you are using the dividends, from year to year, in reduction of the annual pay- ment. Our better class of life companies have been paying on this kind of insurance, the last 20 years, a dividend of from 25 to 40 per cent, per annum, as an average for the whole time. Suppose, at the end of the twenty years, your dividends have averaged 33}^ per cent, of the annual premium; we then have the following results: Twenty- Year Endowment at Afire 35: Gross annual premium for $10,000 $485 80 Less the assumed average annual dividend. .... 161 93 Net annual payment $323 87 The investment element returned with six per cent, compound interest, end of twenty years, in the $10,000 paid by Company 256 50 Annual cost for $10,000 insurance $67 37 At ages thirty, twenty-five, or twenty, with the same as- sumptions as above, the results would be as follows: Twenty- Year Endbwment at Agre 30: Gross annual premium for $10,000 $471 10 Less the assumed average annual dividend 157 03 Net annual payment $314 07 The investment element returned, &c 256 50 Annual cost for $10,000 insurance $57 57 Twenty-Year Endowment at Agre 25: Gross annual premium for $10,000 $460 70 Less the assumed average annual dividend 153 57 Net annual payment $307 13 The investment element returned, &c 256 50 Annual cost for $10,000 insurance $50 63 Twenty- Year Endowment at Agre 20: Gross annual premium for $10,000 $452 90 Less the assumed average annual dividend 150 97 Net annual payment $301 93 The investment element returned, &c 256 50 Annual cost for $10,000 insurance $45 43 Equally satisfactory results can be shown in shorter or longer endowments. Table No. 12 gives the investment elements at certain rates of interest. In a ten-year endowment, for example, the annual premium for $10,000 at age 35, is, say, $1,025.10. De- 84 THE THREE SYSTEMS duct from this the average dividend of the company, and from this result the Investment element, $715.70, and the balance shows the cost of Insurance ; and, similarly, with endowments running fifteen, twenty-five, thirty or thirtj'-five years. If the rate of in- terest assumed in our illustrations — 6 per cent. — seems too high, use the investment elements at a lower rate, as shown in the table. Tou have not failed to notice that, while the Investment EUement in the foregoing examples is the same, the cost of in- surance varies ; it is $45.43 per year, for the youngest age, and $67.87 per year, for the oldest. The difference in age does not af- fect the Investment Element, provided the amount and kind of Endowment are the same. But the cost of insurance is greater at the older ages. By referring to Table No. 18, you will see why. At age 25, less than seventeen out of one hundred die in twenty years; while at age 35, the death rate for the same time is twenty one. ' A little further on will be found some examples of Matured Endowments. These should be carefully examined. Before you do this, however, we desire to make one or two points very clear. If successful in this the subject of endowments will be freed from many vexatious complications. You will now turn to Table No. 12. Until you understand this table, you cannot comprehend our explanation of endowments. With the table before you, look for 16 in the year column, to the right hand of which, in the column headed " six per cent., you will find $36.75. This is the annual investment, which, if compounded annually at six per cent, interest, will amount to exactly $1,000 in sixteen years. In the same six per cent, colunm, at the right hand of 20, may be found $2j5.65. This is the annual investment, which, if com- pounded annually at six per cent, interest, will amount to f 1,000 in twenty years. If you would multiply the result, you must multiply the annual investment. Ten times either of the above annual investments will produce ten times f 1,000, or $10,000. In a similar manner, by this table, you can tell at a glance the required annual investment, which, if compounded annually at a certain rate of interest, will amount to $1,000, or any multiple of $1,000, in a given number of years not exceed- ing 50. At age 40, an Ordinary 20- Year Endowment Policy, for $10,000, requires the payment of twenty annual premiums of $508.70, each, the rate varying a little in different companies. For convenience of illustration we divide this premium into two parts, as follows: 1. The Investment Element $256 50 2. The Insurance Element 252 20 Gross premium 508 70 In a policy like the above, every company agrees to do one of OF LIFE mSURANCB. 85 two things, provided, always, that the insured fulfill his part of the policy contract, viz. (1), it agrees to pay to the insured $10,000 at the end of twenty years, provided he shall then be living to receive it ; or, (2), it agrees to pay to somebody else $10,000, provided the insured die at any time during the twenty years. Let it be assumed that such a policy has been issued ; that the insured has lived the twenty years, and that he has re- ceived the $10,000 as stipulated in the contract. By again con- sulting TabJe No. 12, it will be seen that when the company paid the $10,000 to the insured, it simply returned $256.50 of every one of the twenty annual premiums paid, together with six per cent, compound interest on the same, for the entire time the money was in its hands !I It is a six per' oent. ooxupound interest investznent, so far as $256.50 of the gross premium is concerned. And this was guaranteed by the company from the start, because it required precisely such an investment to produce the $10,000 which the company agreed to pay. Not only this, but had the insured died at any time after the payment of the first annual premium, and within the endowment period, the company agreed that it would pay to somebody as much as would be produced by such an investment. Living until the end of the twenty years, or dying during the twenty years, the insured was guaranteed, in the policy contract, the six per cent, compound interest investment described! Wc have now disposed of the in- vestment element of the premium ; but what has been done with the insurance element, $252.20 ? If this policy were issued by one of our best mutual oompanies, the average annual cash dividend, during the twenty years, probably equaled one-third of the gross premium. The gross premium is $508.70, and one-third of it is $169.57, which has been used in reducing the insurance element. Taking $169.57 from $252.20, leaves a balance of $82.63, the average annual cost of the $10,000 insurance. A splendid investment 1 Very cheap insur- ance. This is an assumed case, but you will see that the assumed, are not as good as the actual, results in the following examples of matured endo'^ments: Example 1. —Policy No. 6,014 ; amount, $8,000 ; date of policy, July, 1867 ; kind of policy, 16-year endowment requiring* sixteen annual payments of $480.06, each ; age of the party insured, 30 years. He paid sixteen premiums amounting to $7,695 36 Less the dividends 2,043 07 Total net payments in sixteen years 5,652 29 Average net annual payment 353 27 The annual investment which, if compounded annually, at six per cent, interest, will amount to $8,000 in sixteen years 294 00 86 THS THREE SYSTESfS Net annual cost of the insurance $59 27 Net annual cost per $1,000 7 41 This endowment matured and was paid July 1, 1883. The investment was $294.00 per year for sixteen year. He realized six per cent, compound interest on it, the principal and interest amounting to $8,000. The insurance cost him only $7.41 for each $1,000 !! Example 2.— Polioy No. 52,088 ; amount, $5,000 ; date of Policy, March 6, 1870 ; kind of Policy, Ten- Year Endowment requiringr ten annual payments of $620.75, each; agre of the party insured, 30 years. He paid ten premiums, amounting to $5,297 50 Less the dividends 1,593 35 Total net payments in ten years 3,704 15 Average net annual payment 370 42 The annual investment, which, if compounded annually, at six per cent, interest, will amount to $5,000 in ten years 357 85 Net annual cost of the insurance 12 57 Net annual cost per $1,000 2 51 This endowment matured and was paid March 5, 1880. The investment was $357.85 per annum for ten years. He realized six per cent, compound interest on it, the principal and interest amounting to $5,000. The insurance cost him only $2.51 for each $1,000. Example 3.— Policy No. 37,580 ; amount, $4,000 : date of policy, March 26, 1866 ; kind of policy, 15- year Endowment requiringr fifteen annual pa3n3aent& of $302.12, each; a^e of the party insured, 40 years. He paid fifteen premiums, amounting to $4,531 80 Less the dividends 1,656 55 Total net payments in fifteen years 2,875 25 Average net annual payment 191 68 The annual investment, which, if compounded annually, at six per cent, interest, will amount to $4, 000 in fifteen years 162 12 Net annual cost of the insurance 29 56 Net annual cost per $1,000 7 39 This endowment matured and was paid March 26, 1881. The investment was $162.12 per annum, for fifteen years. He realized six per cent, compound interest on it, the principal and interest amounting to $4,000. The insurance cost him only $7.39 for each $1,000. I OP LIFE INSURANCE. 37 Example 4.— Policy No. 6,B48; amount, $6,000; date of policy, December 26, 1865; kind of policy, 18-year Endowment requiring eighteen annual pay- ments of $352.32, each; agre of the party insured, 37 years. He paid eighteen premiums, amounting to. $6,841 76 Less the dividends 2,527 18 Total net payments in eighteen years 3,814 58 Average net annual payment 211 92 The annual investment, which, if compounded annually, at six per cent, interest, will amount to $6,000 in eighteen years 183 18 Net annual cost of the insurance 28 74 Net annual cost per $1,000 4 79 This endowment matured and was paid December 26, 1883. The investment was $183.18, per annum, for eighteen years. He realized six per cent, compound interest on it, the principal and interest amounting to $6,000. The insurance cost him only $4.79 for each $1,000. Example 5.— Policy No. 2,541; amount, $1,000; date of policy, November 13, 1862; kind of policy, 20-year Endowment requiringr twenty annual pay- ments of $48.40, each; agre of the party insured, 40 years. He paid twenty premiums amounting to $969 80 Less the dividends 358 93 Total net payments in twenty years 610 87 Average net annual payment 30 54 , The annual investment which, if compounded annually, at six per cent, interest, will amount to $1,000 in twenty years 25 65 Net annual cost of the insurance 4 89 This endowment matured and was paid November 13, 1882. The investment was $25.65, per annum, for twenty years. He realized six per cent, compound interest on it, the principal and interest amounting to $1,000. The insurance cost him only $4.89 for each $1,000. In the foregoing examples, all the cash dividends were used in the reduction of annual premiums. In the following examples the dividends were used in the purchase, from year to year, of additions to the policies, payable with the policies. Example 6.— Policy, No. 30,777 ; amount, $1,000; date of policy, February 1, 1868; kind of policy, 13- 88 THE THREE SYSTEMS Year Endowment, requiring ten annual payments of $86.60, each; age of the party insured, 22 years. Total amount of policy and additions paid to the insured, by the company, February 1, 1881, $1,282 78 Cash dividend paid him February 1, 1881 34 97 Cash dividend paid him February 1, 1882 26 15 $1,343 90 His ten premiums improved at 6% per cent, compound interest would have amounted at date of settlement to $1,349 38 And he received in addition life insurance for thirteen years, for an increasing amount, ranging from $1,000 to $1,282.78! Example 7 — Policy No. 45,362; amount $1,000; date of policy, April 28, 1869 ; kind of policy, 10- year Endowment requiring ten annual payments of $96.41, each; affe of the party insured, 36 years. Total amount of policy and additions paid to the insured, by the company, April 28, 1879 $1,218 88 Cash dividend paid him April 28, 1880 42 86 $1,261 74 His ten premiums improved at 4% per cent, compound interest, for the time, would amount to $1,264 36 And he received in addition life insurance for ten years, for an increasing amount, ranging from $1,000 to $1,218,881 If the National Banks were to advertise that, upon depositing with them $256.50 every year, for twenty years, at the end of the 20 years the deposits would be returned, with six per 6ent. compound interest, amounting to $10,000 for every de- positor, and if a small additional sum were deposited with each $256.50, they would pay, in the event of the death of a de- positor, before the expiration of the 20 years, the whole amount of $10,000, sixty or ninety days after date of death, what a stampede there would be to all our National Banks; and yet, varying the figures to correspond with the different ages of persons and classes of policies, this is substantially what all the better class of life companies are doinff every day in the year and every hour in the day, in offering these endow- ments to business and professional men and capitalists. Semi-Endowment Policies.— By this form of insurance the face value of the policy is payable if the insured die within a certain number of years— usually ten, fifteen or twenty— but if alive at the end of that time, then only one-half of the amount, w^ith accumulations, if any, will be paid to the owner of the policy. OF LIFE II7SURANCB. 89 CHAPTER V. Tontine Insurance.— Semi-Tontine Insurance.— Emery Mc- Clintock's Description of Them. — Senate Resolution No. 100, OF the Ohio Legislature.— Appointment of a commttteb of investigation.— members of the commtt- tbe. — Their Report on Tontines and Semi-Tontines.— Extracts from Sworn Testimony. — Remarks, Etc., Etc. Tontine and Semi-Tontine Policies. — The following explanation of these two forms of policies is from Emery McClintock, Actuary of the North Western Mutual Life Insurance Company, of Milwaukee, Wisconsin, and it is so clearly stated, and so free from offensire partisanship that we gladly insert it for the benefit of our readers. Tontine Policies are issued on any usual fprm, the same as ordinary policies, such as ordinary life, limited payment life, or en- dowment policies. They are issued at the usual rates of premium, and the only difference between such policies and ordinary poli- cies lies in certain peculiar stipulations. The first stipulation is as follows : *'No dividend ihall be allowed or paid upon this policy until the person whose life is insured thereby shall survive the completion of its tontine dividend period, and unless this policy shall then be in force." The period referred to is either ten, fifteen, or twenty years, according to the choice made by the policy holder in his original application. The effect of this stipulation is that each premium must be paid in full in cash, during the tontine period, without being reduced by dividends. The second stipulation is: " Previous to the completion of its tontine dividend period, this policy shall have no surrender value in a paid-up policy or otherwise. The effect of the stipulations above quoted is to produce sav- ings to the Company, first, in not paying out dividends, and sec- ondly, in not issuing paid-up policies in case of lapse. The value of such savings, with their accumulations, is credited to the tontine policies which complete their respective periods. Semi-tontine Policies form a separate variety, being like tontine policies as regards withholding dividends, but enjoying 40 THE THREE SYSTEMS the same privileges as ordinary policies in case of lapse, as regards paid-up insurance. How THE Surplus is Ascertained. — An account is kept by the Company from year to year of the special savings derived, as above explained, from tontine policies ; and a separate account is kept for semi-tontine policies. To keep in view the equitable rights of each tontine and semi-tontine policy, a provisional ac- count or memorandum of its contributions to the undivided sur- plus is kept, including its share of special tontine profits, adding interest from year to year at the current rate used in the ordinary dividend calculations. The memorandum thus kept of each policy is subject to future rectification, and is not in the nature of a deposit account, nor does it create any liability, technically speaking, different from the usual duty of every company to dis. tribute in due time its undivided surplus on equitable principles. The sum of all these memorandum accounts shows the total ton- tine surplus of the Company. The accounts for each calendar year cannot be made up until sixty days after December 31st, owing to the conditional right possessed by the holders of lapsed tontine policies to restore them within that time. By the end of March in each year, the tontine accounts of the previous year can be completed. Any member, who has been insured three years, who wishes to learn the present condition of the memorandum account kept in his own case, can do so by addressing the Com- pany. A fuller description of the method of keeping the tontine accounts will be supplied to any member on request. What May Be Done With the Surplus. — The holder of a tontine or semi-tontine policy may, at the end of his tontine pe- riod, presuming that he wishes to keep his policy in force, employ the accumulated surplus which may then be at his disposal in one of three ways: 1st. He can withdraw it in cash. 2d. He can employ its value in reducing the amount of the future annual premium payable. If his policy is an ordinary life policy, this is equivalent to purchasing an annuity for life equal to the amount by which the annual premium is reduced. The annuity is calculated for a larger annual amount than the mere in- terest on the money, but on the understanding that the Company is in no case to refund any part of it, except as stated, towards payment of premiums. Such an annuity will possess at all times an equitable value, and it is provided that in any year in which the premium so reduced is not paid in cash, the value of the an- nuity shall be drawn upon towards meeting it, so as to keep the policy in force. (Of course, the effect of this would be to make the subsequent premiimis each proportionately larger. ) 8d. He can, on furnishing satisfactory proof of good health, purchase with the surplus a non-forfeitable participating paid-up addition to his policy. OF LIFE INSURANCE. 41 JSndowments maturing at the end of the tontine period cannot be continued in force, but are simply paid off when due, with Accumulated surplus. Option of Surrender at End of Period. — If, at the end of the tontine period, the insured prefers to discontinue his policy, he can surrender it, either for cash or for paid-up insu- rance, according to his option. (If the paid-up policy exceeds the original amount, proof of good health will be required.) If he takes the cash, the Company pays him not only the accumu- lated surplus, but also the entire reserve held on the policy, aris- ing out of his past payments. The amount of reserve which will be held and paid is inserted in the policy, but no stipulation is possible, of course, concerning the amount of the surplus which is to accumulate, nor does the Company undertake to make in ■advance any prediction concerning its probable amount. This option of surrender, which gives the insured the benefit of every dollar in the Company's hands in any way pertaining to bis policy, in case he wishes to discontinue, forms the most valuable feature of the tontine and semi-tontine plans of life in- surance. On no other system is so sweeping a privilege obtaina- T>le. The more this point is reflected upon, the greater the advan- tage appears which it confers. It is to be exercised many years in the future, and such far distant subjects usually attract little thought, but on each such policy the time will come when this privilege, inserted at the beginning in the contract, will be found of the utmost importance. No one can now foretell his situation "twenty years hence. He may need insurance then more than ever, or he may have no use for it at all. With this privilege, he finds himself on the one hand just as well off as if he had origin- ally taken the policy for a longer term, and on the other hand, as if be had chosen an endowment maturing at the time. The ton- tine or semi-tontine policy combines the advantages of the life policy and the endowment, being adapted at all points to the con- tingencies of the future. The Cheapest Form of Insurance. — Where a tontine or .semi- tontine policy is surrendered at the end of the period and tbe cash value taken, and the holder compares his payments with the sum returned to him, whatever the latter may be, he finds the net cost much less than he would have had to pay for the same insurance in the same company on any other plan. This is obvi- ous on the surface ; for he receives on surrender all the surplus, "with interest, which would have been paid as dividends on the policy had it not been on the tontine plan, and also his share of tbe surplus, with interest, which would have been paid on the policies of members who have died or discontinued . Tontine insurance, more than any other system ever devised, 'BQUALiizES the benefits of life insurance The heirs of those who ^ie early get a large return in any event, even without dividends; 42 THE THREE SYSTEMS while those who pay the longest, and have the premium paying^ burden of the whole period, receive all the dividends. Since the results of tontine policies are more advantageous pecuniarily than on any other class of policies in the same com- pany, the only question remaining for those who are satisfied of the benefits of the plan is, to choose that company which will afford him the best return for his money- SENATE RESOLUTION NO. lOO. '* Be it resolved. That the Insurance Commissioner of Ohio is hereby authorized and required, with three members (of this Sen- ate), to be appointed by tae President of the Senate, to proceed at once to the states where such Tontine insurance companies are located and doing business in Ohio, and examine into and report to this Senate, if in session, and if not in session, to the Insur- ance Department. of Ohio, upon the matters relating to such com- panies, as hereinafter set forth. Said Conmiittee, consisting of said Insurance Conunissioner and Senators so appointed, shall have authority to procure such special assistant as shall be deemed advisable by them to carry out the provisions of this resolution." The above resolution was adopted in the Ohio Senate, April 15, 1885. The matters about which investigation was to be made were as follows: *' First— 8iieci&\\y as to the amount of insurance issued to the citizens of Ohio upon the Tontine plan. "'Second— As to the amount of such Tontine fund placed to the credit of such policies. "TAirJ—As to the mode of keeping the Tontine accounts with all the policy-holders, and whether such fund, or any part thereof, can be appropriated by the officers of such companies for any purpose other than the purpose originally intendea, and whether sucn fund or any part thereof has been so appropriated or in any manner misapplied; and generally as to the plans and methods of doing business by such companies both at the home office and in Ohio through agencies. '* Fourth— As to the credits of such companies upon policies of insurance, to be obtained, for the purpose of establishing a basis for taxation in Ohio." The conunittee appointed under the foregoing resolution were as follows: Hon. Henry J. Reinmund, Superintendent of Insur- ance; Hon. S. P. Wolcott, Senator; Hon. Elmer White, Senator; Hon. A. C. Cable, Senator. Mr. Sheppard Romans, of New York, was appointed Special Assistant to the Conunittee. The conunittee met at the office of the Equitable Life Assur- ance Society of the United States, at the company's building, 120 Broadway, Kew York, May 29, 1885, and during their investiga- tions they examined the following companies, designated in their report as OF LIFE INSURANCE. 4a TABLE NO. 1. Tontine Companies doin^; business in Ohio. Designation of Policies. 1. — ^-^tna, Hartford, Conn 2.— Equitable, New York, N. Y 8. — Home, Brooklyn, N. Y 4.— Metropolitan, New York, K. Y. 5.— Michigan Mutual, Detroit, Mich. 6.— Mutual, New York, N. Y 7.— New York, New York, N. Y.. . . 8. — North- Western Mutual, Milwau- kee, Wis 9. — Penn Mutual, Phila., Pa 10. — Union Mutual, Portland, Me. . . n.— United States, New York, N. Y. Terminable Endowments. Tontine and Semi-Tontine; Life-Rate Endowments. Reserve Endowments. Life -Rate Endowments. Five-^ear Distribution. Tontine and non-forfeiture- Tontine. Tontine and Semi-Tontine. Life-Rate Endowment. Life-Rate Endowment. Tontine and Semi-Tontine. "Note. — Li the Tontine list are included all those companies in which surplus is accumulated for a number of years for the benefit of persistent survivors." After finishing their labors two reports were made: one by the three skaters, dated Columbus, Ohio, August 19, 1885; the other by Henry W. Reinmund, Superintendent of Insurance, and Shep- pard Homans, Actuary, assistant to Committee, dated Columbus, Ohio, August 21, 1885. These two reports agree substantially, on all points of vital importance, and, as the latter is more full, in some respects, we give it preference, not having the space for both. It is as follows: **The undersigned, while coinciding in the main with the views so well expressed by the Ohio Senators in the foregoing report, feel that m addition a resume or digest of the evidence obtained by the committee is desirable, for the information of the public. We bear cheerful testimony to the zeal and impartiality of the Senators, in securing information upon the important sub- ject confided to us by the Legislature. The committee sought, and obtained, wherever practicable, testimony from the oppo- nents as well as from the advocates of Tontine insurance, with the view of separating that which was the result of careful inves- tigation and accurate knowledge, from that which may properly be attributed to mere sentiment, or in some few cases to igno- rance or malice. The criticisms made by the opponents of the Tontine system of Life Insurance are mainly as follows: (1.) That it is a gambling scheme. (2.) That by harsh penalties in case of forfeiture it tends to deprive families of the protection which they otherwise would have obtained under ordinary policies. (3. ) That the expenses are greater in Tontine companies. (4.) That the accounts with Tontine policy-holders are im- perfectly kept, and that the funds may be misappropriated. (1. ) As regards the charge that Tontine Insurance is a gam- bling scheme. — Gambling, as usually understood, is a scheme by which one gets something for nothing — where no valuable con- sideration is given by the winner to the loser — where the gain to one is precisely offset by the loss to the other— and where the 44 THE THREE SYSTEMS gain or loss depends not on the will or power of either party, but rather upon mere chance or skill. It is usually condemned as a ▼ice, as subversive of public morals, as wicked and unlawful. Nothing in the evidence obtained by the committee shows or even tends to show, that such grave charges can justly be brought against Tontine Life Insurance. On the contrar}-, the evidence clearly proves that Tontine Companies derive solid advantages from Tontine contracts, and can safely promise, and in fact do give great and solid benefit to Tontine policy-holders. Statistics abundantly prove, for instance, that when applicants for insur- ance deliberately elect to pay larger premiums tnan are absolutely necessary, as Tontine poiicy-hol(lers do when they elect to for- bear the usual yearly aividends, they thereby give evidence, un- consciously perhaps, or by instinct, that they expect to live to enjoy the benefits promised in case of long life — in other words, they give evidence of superior vitality, which is more reliable in determining the value of the risk than the most skillful medical examination. It is clearly proven that the rates of mortality, and also the rates of lapses,* or discontinuances, are far less amonj^ Tontine than among non-Tontine policy-holders. These consti- tute the solid advantages of Tontine contracts, and the companies can give, and in fact do give, in return, ample and compensating advantages in the way of larger dividends or surplus and larger surrender values than can be safely promised or given under or- dinary policies. Tontine and ordinary policies are precisely similar as regards the rates of premium charged, as regards the covenant by the company to pay in full the sum insured, and as regards the non- payment of any surrender value until two or three years have elapsed. They differ only in the following respects: Under a full Tontine contract the right is waived (for valuable consideration) to any surrender value or to an v dividend of surplus until the end of the Tontine periods elected. Under a non-forfeiting limited, or semi-Tontine contract, the same ri^ht to a surrender value is given that attaches to an ordinary policy, but the right is waived (for valuable consideration) to any dividend of surplus until the end of the Tontine period selected. In other words, these eon- tracts differ only in the^amount of the penalty exacted in case of discontinuance and in the periods agreed upon for distributions of surplus among policy-holders. No Life Insurance Company could, without endangering its safety, permit policy-holders to withdraw at will, in cash, their full reserves, or even a large fraction thereof, in case of sur- render, because in case of a panic, for instance, resulting from losses in investments or from excessive mortality during an epi- demic, the sound lives might withdraw, and only the impaired lives might remain. Without proper penalties to prevent sound lives from withdrawing, Life Insurance would be unsafe, and in fact impossible. Penalties for the non-performance of contracts are essential to the well-being and security of society itself, and are by no means confined to Life Insurance. The company is bound by the strict letter of the policy contract. It cannot refuse to re- ceive a premium, even if the person insured were on the brink of the grave. The policy-holder, on the contrary, may discon- tinue at will, and usually the performance or non -performance on hisjjartof the conditions of his contract depends upon his own volition. The penalty for discontinuance is greater upon Ton- tine than it is upon non-Tontine contracts, but the companies claim that in the former case the increased penalty is amply OF LIFE INSURANCE. 45 offset by increased benefits. The difference is one of degree, not of kind. The principle is the same in both cases. A Tontine policy-holder is somewhat like a special partner put- ting capital into a mercantile business for a term of years. He would not be allowed to withdraw his capital at will — that might ruin the business — but at the end of the partnership period he would have the right to withdraw his entire capital and his full share of profits. A Life Insurance Company could not permit a policy-holder to withdraw his full reserve at will, but by reason of the superior quality of Tontine risks, and as a proper compen- sation therefor, it can safely promise to pay in cash at the end of a lon^ period, or periods named, in advance, the full reserve, in addition to the full share of surplus, in case of surrender. In other words, a Tontine policy-holder has the right, at stated times, to §ive up his insurance and withdraw his full equity in cash. This great advantage could not safely be promised under ordinary policies. No complaints have been made by beneficiaries under death claims of forfeiture penalties, and but few from those who have completed their Tontine periods. In cases of early deaths the investments have yielded many hundred, perhaps several thousand per cent. In case of long life and performance of the conditions of the contract, the investment will yield far more under a Ton- tine than under an ordinary contract. It is claimed by the advo- cates of Tontine Insurance, that the benefits as between the long- lived and the shortlived are thus equalized. Only those persons who break their contracts feel aggrieved by the heavy penalties. To such it has been unfortunate, and the losses in many cases must have been heavy. There is no evidence, however, that there was any concealment by the company, or that the contract was not voluntary on the part of the applicant, or that he did not understand fully the penalties for non-performance as well as the benefits which might be expected from the performance of his contract. The applicant was left to select that form of insurance which he considered the best suited to his needs or his pocket. This is just as it should be. If an applicant has not confidence in his ability to keep up his premium payments, ordinary business prudence would impel him to select a semi-Tontine or an ordinary policy. If his object is simply to protect his family at the lowest outlay consistent with security, he may choose renewable term insurance where the investment element is eliminated. But as the senators well observed, he should not be deprived of his right to make his own selection. It may be added that Tontine Insurance is allowed and prac- ticed in every state in the Union, while in some states — notably in New York— the essential conditions of that form of contract are sanctioned by distinct legislative enactments. (2). — As regards the charge that Tontine contracts tend to de- prive families of the protection which thep otherwise would have obtained under ordinary policies. — ^The whole testimony obtained by the committee disproves this charge. The rates of discontinu- ances, except m the first two or three years when the conditions of the two contracts are similar, are far less among Tontine than among non-Tontine policies, and this is easily accounted for. The penalty in case of lapse, and the reward in case of persist- ence, are both greater. The definite promise to pay a large sum in cash at the end of the Tontine period, as surplus and guaran- teed surrender value, furnishes a substantial collateral, available, if necessary, to borrow money to pay premiums, and would thus enable a Tontine policy-holder to keep up his insurance when an ordinary policy-holder would be compelled to lapse, or to accept. 46 THE THREE SYSTEMS (as a Semi-Tontine policy-holder might also do) a small paid-up insurance. Human nature h so weak that it often neglects duties which arc for our own interest or benefit, unless there is a penalty for the non -performance, or a reward for the performance of the same. (3.). — Aa regards the charge that expenses are greater in Ton- tine Companies.— llexQ, again, the evidence and statistical in- formation disprove the charge. The heaviest expenses are gen- erally those incurred at the time the policy is issued, and the greater the volume of new business the greater the apparent ex- penses. The Tontine Companies issued seventy-four per cent, of the new insurances in 1884, but their expenses are actually smaller than those of the non-Tontine Companies when com- pared to new business, or to insurances in force when properly classified. (4.). — As regards the tnsthods of keeping the accounts, and the proper application of /Aa funds. — No evidence of wrong doing has been offered to the committee, or that the funds properly be- lon^ng to Tontine policy-holders are not managed with fidelity anaintegrity, and are not held intact for the benefit of the proper beneficiaries. In fact, no charge or complaint of this nature has been made or is known to the committee as having been made against an^ company. In conclusion, the evidence obtained by the committee demonstrates that the Tontine system of Life In- surance is lawful ; that while the penalties exacted in case of dis- continuance are greater than upon ordinary polices, the advan tages in case of continuance are also greater. These penalties differ in degree, not in kind, and hence the term gambling is no more applicable to Tontine than to non-Tontine Insurance, and in fact is applicable to neither. The fulfillment of the Tontine contract is encouraged rather than discouraged by these penalties, and the greater benefits given on these contracts. The companies generally might, with advantage, be more frank and full in statements to policjr-holders affecting their in- terests ; or, in other words, might, with advantage, take policy- holders more fully into their confidence. The best way to dis- arm and dispel adverse criticism, whether proceeding from hon- est doubt or ignorance, is by the simple logic of facts and figures. Signed, Henry J. Reinmund, Superintendent of Insurance. Sheppard Homans. Actuary, Assistant to Committee. Columbus, August 2, 1885. EiZtraots from the Testimony g'iven to the Oommittee. Fixami nation of the Eqiiitable Life. **New York, May 29, 1885. Mr. Joel G. Van Cise, being duly sworn, testified as follows: ^Examined by Mr. Homans). Q. You are one of the actuaries of the Equitable Society ? A. Yes. Q, For how long a time ? A. I have been connected with the Society for eighteen years this fall. I have been one of the actuaries for about four- teen years. OP LIFE INSURANCE. 47 Q. You have charge of the books and accounts and the cal- culations on Tontine policies ? A. Yes, sir. Q. Please read to the committee the printed statement which you have just handed to me. * As to policies in the Tontine classes, a special account is kept of the income and out go properly belonging to these classes sep- arate from the other business of the Society, so that the amount of the Tontine fund, that is, the share of the whole amount of assets properly belonging to policies in the Tontine classes, can be ascertained at the end of each year. To do this the Tontine fund is credited with all premiums received from Tontine policies, is charged with a due proportion of expenses upon these pre- miums, receives credit for interest upon its accumulations pro- portionate to that made on the total funds of the company, and has to pay the losses by death (occurring among the Tontine poli- cies only) and the claims of such policies as reach the end of tneir Tontine periods. At the end of each year the total amount of the Tontine fund, and the total amount of reserve necessary to have on hand to secure the original and absolute obligations under the Tontine policies, is calculated, and the difference between these amounts is the Tontine sui*plu8, part of which belongs to the policies completing their Tontine periods in the year just en. tered upon, while a far larger part belongs to the far more numer- ous policies which will mature in the many succeeding years. As the Tontine policies, after completing their Tontine terms, leave the Tontine class and cannot participate in future divisions of surplus, the opportunity to correct in each future division any error made in previous distributions is taken away, und it is nec- essary to determine with accuracy the share of the surplus be- longing to the outgoing members of the Tontine class. It would have simplified the calculation, perhaps, to have made separate classes for each year of issue of policies with the same Tontine period, so that there would be no mingling of the claims of poli- cies leaving the class with the claims of policies having yet many years to remain in the class. But there was the insu- perable objection to this plan, that in small numbers and even in numbers of considerable magnitude, irregularities will arise very troublesome in practice and giving rise to grave sus- picions of unfairness, and it is therefore desirable in all life assurance calculations to take advantage of the largest averages attainable. It was therefore decided that all policies with the same length of Tontine period, no matter in what year issued, should be classified together for the purpose of determining the rate of dividends to be allowed, and the plan in detail was this: RateB of interest, of mortality, of lapses, and of management expenses, were assumed, approximating to the actual as nearly as possible. On the basis of these rates a calculation of what 48 THE THREE 8Y8TKM8 would be the surplus on policies taken out at every age and at thft i;ncl of every year of their existence during the Tontine period was inafle. and tables of estimated surpluses for all possible con- tingencies formed. With these tables it is easy at the end of each year to calculate the expected surplus on each Tontine policy in force. The total of these expected surpluses, when compared with the total actual surplus as shown by the valuation of the Tontine policies, gives a ratio of the expected to the actual sur- plus; and applying this ratio to the estimated surplus by the tables on policies just maturing, we get the actual surplus to which they are entitled. The actual surplus for each policy whose Tontine term is not ended, could of course be calculated in the same way by applying the ratio to the estimated surplus on them iis given by the tables; but as these policies cannot draw any Hurplus till their Tontine period is concluded, this detailed calcuhition would be useless; and it is sufficient to leave this sur- pliiH undisturbed to accumulate for another year when the same work of calculation and of distribution to the policies then matur- ing has to be repeated.' Q. I will ank you if that statement is a correct statement of tlie way in which you have made the estimates, made up the ac- countM, and (;n?dited individuals who are entitled to acredit under Tontine policies? A. Yes. Q. Has any departure ever been made in any Tontine policy or Tontine; (rlass, from the principles laid down in that printed statement? A. No, sir. Q. I would like to ask you if there has ever been any com- pulsion or pcjrsuasion on the part of the officers in the case of any individual policy, or any class of policies, to alter or depart from the principles, as laid down there ? A. No, sir. Q. And this printed statement, which is copied here, is the corrcjct explanation of the method adopted by the Equitable LiFK Assurance Society, in dealing with all its Tontine policies? A. Yes, sir ; it is printed for the information of its policy- holders, on the Tontine plan. Q. By Mr. Romans : Am I correct in this : that in this com- pany the Mortality against Tontine policies only is charged against the Tontine fund, whereas, in the New York Life, for instance, they assume the average Mortality in the Company, and charge the average rate against the Tontine fund ? A. It is true that our Tontine policies and Tontine classes only pay the death losses occumng in those classes. That is true, according to our calculations. What you say in regard to the other Companies— the New York Life Company, for instance OF LIFE INSXJBANCB. 49 — is substantially true. Their dividend calculations are based upon the fact of an average Mortality through the Company, whether it is Tontine or Ordinary Policies. The same is true with the Northwestern. Q, As I understand it, in the policy-contracts made with the Tontine policy-holders, you covenant to charge only the Mor- tality arising from members of the Tontine class ? A. I do not know that that is covenanted in the application of the policy, but it has been set forth in all our circulars and publications. Q. And in making these awards of surplus, you have had strict regard to that peculiarity ? A. Made the exact calculations ; charged only for the death losses actually paid. Q. One point of inquiry that is submitted to this committee, is not only the question as to how the Tontine accounts are kept, but the question is asked whether, in the appropriation of the surplus, any portion of the Tontine fund has been appropriated, or in any manner misapplied, contrary to the agreement ? A. Not one dollar. Q. And that in all the Tontine accounts you have put to the credit of the fund the total premiums received on Tontine poli- cies, you have charged that fund with the average expenses of the Society on its business, and with the actual death claims paid among the members of the Tontine fund, and have credited the fund with the average rate of interest received by the Society on its investments ? A. Yes, sir ; no departure has been made from that rule. Prom schedule "A" sriven by the New York Life to the Senate Oomxnittee, showing the comparative rate of dis- continuance of insurance — ^lapse — of Tontine and non-Tontine made up from the company's actual experience for 10 years upon policies issued in 1872 and 1873, we obtain the following inter- esting and instructive facts : Amount of Tontine Insurance for which pre- miums were paid, first year $17,889,000 Amount of non-Tontine Insurance for which premiums were paid, first year $19,748,000 Total Tontine Insurance remaining in force, end of 10th year, (55 per cent, of original amount) *. , $9,865,000 Total non-Tontine Insurance remaining in force, end of 10th year, (31 per cent, of original amount) $6,064,000 From schedule '• B " we gather the following facts with reference to dividends upon Tontine and Non -Tontine policies^ in Ohio, during a period of 10 years : 50 THB THREE SYSTEMS Example 1.— Policy No. 109,314 ; Amount, $3,000 ; date, Nov. 7, 1874 ; age of the msuiiED, 31 ; Annual Premium, $70.05 ; Ordinary Life Tontine. (1.) — Premiums received in 10 years $700.50 (2.) —Tontine dividends in 10 years 269.79 Per cent, of (2) to (1), 38. Example 2.— Policy No. 118,402 ; Amount, $5,000 ; date, Feb. 28, 1876 ; age, 31 ; Annual Premium, $116.75 ; Ordinary- Life, Non-Tontine (1.)— Premiums received in 10 years $1,167.50 (2.) — Dividends paid in 10 years 184.49 (8.) — Dividends paid at 6 % comp. interest 235.68 Per cent, of (3 ) to (1), 20. Example 3. — Policy No. 111,458; Amount, $1,000; date, Feb. 23, 1875 ; age op the insured, 40 ; Annual Premium, $31.30 ; Ordinary Life, Tontine. (1.)— Premiums received in 10 years $313.00 (2.)— Tontine dividends in 10 years 110.68 Per cent, of (2) to (1), 35. Example 4. — Policy No. 117,137 ; Amount, $2,500 ; date, Dec. 18, 1875 ; age, 40 ; Annual Premium, $78.25 ; Ordinary Life, Non-Tontine. (1.)— Premiums received in 10 years $782.50 2.)— Dividends paid in 10 years 118.96 3.)— Dividends paid at 6 ^ comp. interest 151.73 Per cent, of (3 ) to (1 ), 19. f Example 5.— Policy No. 110,368 ; Amount, $3,000 ; date, Dec. 28, 1874 ; age of the insured, 54 ; Annual Premium, $171.06 ; Ordinary Life, Tontine. (1.) — Premiums received in 10 years $1,710.60 (2.) —Tontine dividends in 10 years 610.00 Per cent, of (2) to (1), 36. Example 6.— Policy No. 116,177; amount, $1,000; date, Oct. 19, 1875 ; age, 54 ; annual premium, $57.02 ; Ordinary Life, Non-Tontine. (1.) — Premiums received in 10 years $570.20 (2.) —Dividends paid in 10 years 77.02 (3.) —Dividends paid at 6 % comp. interest 97.78 Per cent, of (3 ) to (1), 17. Example 7.— Policy No. 111,776 ; amount, $1,000 ; date, March 10, 1875 ; age of the insured, 47 ; annual premium, $71.25 ; 10- Year Life, Tontine. OP LIFE INSX7BAKCE. 51 (1.)— Premiums received in 10 years $712.50 (2. )— Tontine dividends in 10 years 193. 03 Per cent, of (2 ) to (1), 27. Example 8.— Policy No. 89,074 ; amount, $2,000 ; date. May 2, 1872 ; age, 46 ; annual premium, $138.52 ; 10- Year Life, ITon-Tontine. (1.) — ^Premiums received in 10 years $1,385.20 (2. )— Dividends paid in 10 years 168. 12 '3 .)— Dividends paid at 6 ^ comp. interest 201.11 Per cent, of (3 ) to (1), 15. Example 9.— Policy No. 107,789 ; Amount, $2,000 ; date, Aug. 12, 1874 ; age of the insured, 30 ; Annual Premium, $60.72 ; 20~irear Life, Tontine. (1.) — Premiums received in 10 years $607.20 (2.)— Tontine Dividends in 10 years 219.60 Per cent, of (2) to (1), 36. Example 10.— Policy 103,563 ; Amount, $3,000; date, Jan. 14, 1874 ; AGE, 32 ; Annual Premium, $95.22 ; 20- Year Life, Non-Tontine. (1.)— Premiums received in 10 years $952.20 (2.) — Dividends paid in 10 years 135.64 (3.)— Dividends paid at 6 ^ comp. interest 170.68 Per cent, of (3) to (1 ), 18. Example 11.— Policy No. 91,599 ; amount, $5,000 ; date, Aug. 17, 1872 ; age of the insured, 30 ; annual premium, $242.65 ; 20- Year Endo^wment, Tontine. (1.) — ^Premiums received in 10 years $2,426.50 (2. )— Tontine dividends in 10 years 928.79 Per cent, of (2) to (1), 38. Example 12.— Policy No. 88,387 ; amount $1,000 ; date, April 5, 1872 ; age, 30 ; annual premium, $48.53 ; 20- Year Endow- ment, Non-Tontine. i 1.)— Premiums received in 10 years $485.30 2).— Dividends paid in 10 years 67.38 (3). — Dividends paid at 6 ^ comp. interest 84.25 Percent, of (3)to(l ), 17. The preceeding examples are given to illustrate the marked dif- ference between the dividends of the Tontine policies and those of non-Tontine policies, when issued at about the same age, on the same plan, and having been in force the same number of years. Comparing examples (1) and (2), it will be seen that the k 53 THE THREE SYSTEMS Tontine surplus on the former, at the end of 10 years, is 38 per cent, of all the premiums paid, while the dividends paid on the latter, the non-Tontine policy, improved by six per cent, com- pound interest, amount to only 20 per cent, of the premiums paid during the same number of years I By comparing (3) with (4); (5) with (6); (7) with (8); (9) with (10), and (11) with (12). a corre- sponding marked difference is observed between the dividends of Non-Tontine, and the accumulated surpluses of Tontine, policies, in the same company. In another company, while the per cent, of dijferenee between the Tontine and non-Tontine policies might not vary materially from that shown above, yet the dividends themselves might possibly be very much less, or considerably greater, than those shown in these examples, on the same kind of policies issued at the same ages, and having been in force the same number of years. Leaving out the Massa- chusetts companies, nearly all the Life Companies doing business in the United States have incorporated, in one way or another, the Tontine principle, and, if one wants a Tontine policy, he should exercise a reasonable amount of caution and good com- mon sense in the selection of a company. A company that gives large dividends on the ordinary kinds of policies can give much larger on the same kinds when Tontined; and, a company that pays but meagre dividends on the usual forms, adopting perhaps the Tontine system to " eater up ** its small surpluses, cannot be relied on for large returns of surplus under the Tontine forms of insurance. Premiums. — The sums required to keep a policy in force, according to its conditions. In "The Level Premium System" of Life Insurance, every premiiun is composed of three elements, the Reserve Element, the Mortality Element, and the Expense Element. The annual premium on an Ordinary Life Policy, for $10,000, at the age of 35, is, say, $264.90. This is made up as follows : 1. The Reserve Element $110.39 2. The Mortality Element 88.27 3. The Expense Element 66.24 Gross Premium $264.90 See page 61, for a full explanation of each of these ele- ments. The three elements combined make up what is called the gross premium. The first two elements, combined, amounting to $198.66, make what is called the net premium; and similarly with reference to any other premium for any kind of a policy issued under The Level Premium System. Premium. Notea— Notes given by policy-holders in lieu of a part of the cash payment of the premium. These, if not paid OP LIFE INSURANCE. 58 or canceled by future dividends, are usually deducted from the amount issued in case of death, or at the maturity of an endow- ment. Surplus. — ^The sum left, after providing for the liabilities — present and prospective — of a company. Value of a Policy— The Reserve.—The net value of a policy is the difference between the net single premium for the sum insured at the age of the policy holder, when the policy is valued, and the present value of all future net premiums calculated to be received. The gross value of a policy is the difference between the net single premium, as given above, and the present value of all future gross premiums to be re- ceived on the policy. Owing to a fixed law governing these reserves, life insurance mathematics enables one familiar with it to tell, not only the present, but also the future, net value of any kind of a policy. A tabulated statement of the yearly net values, from the present to any future date, is called an "Abstract op Net Values" for that policy. Some of the advantages of such an abstract are : 1. It names the axnount of cash held by a company in the ** Reserve Accumulations" from year to year, to the credit of a policy, for a term of years. 2. It indicates Ihe equitable cash surrender value of a policy, from year to year, for a designated period of time, com- mencing with tTie present. The cash surrender value is generally from 30 to 95 per cent, of the reserve accumulations. 3. It indicates the amount of paid-up insurance that should be given, if desired, in exchange for the original policy. 4. It indicates the amount of cash loan that could safely be made on a policy, if assignable, as collateral security; one- half to three-fourths of the reserve accumulations would be a safe loan. 5. It is a safe gruide to a correct decision on any proposed changes affecting present insurance. 6. It enables one to closely approximate the loss on a ton- tine policy, if the required number of premiums be not paid, as specified in the contract. 7 . It firives a correct basis for dividends, if any, paid by companies in the hands of Receivers. 8. Such an Abstract makes its owner thoroughly intelli- gent, at all times, with reference to his Insurance. It is protec- tion to the insured ; it is protection to his family. 9. Without one of these Abstracts, for each policy in force, one possesses property the cash value of which he knows 54 THE THREE SYSTEMS little or nothing. He is annually making cash deposits with no definite information as to the balances in his favor. The cost of insurance is the difference between the actual amount of cash premiums paid and the cash surrender value of the reserve accumulations to the credit of the policy. One is supposed to know what he has paid. An Abstract tells him the amount of his reserve accumulations. LIFE INSURANCE FAILURES. In a pamphlet, entitled " Life Insurance ; its history in the United States durinsr the last half oentury." Pub- lished by the Globe Newspaper Company, Boston, Mass. 1885, is the following : **In 1860 there were but fifteen Life Insurance Companies doing- business in the country, and all but two of these companies are doing business now. In 1865 the number had increased to twenty- five. From this time there was a perfect deluge of additions \o the companies. By 1871 there were seventy-two companies try- ing to do a business, which might well have been left to the orig- inal fifteen. There seemed to be a perfect craze. Each city must have its Life Insurance Company, and one being organized an- other must become its rival. Men who had failed in everything else thought that because there had never been a failure in Life Insurance it was their field. Men who knew nothing about the business organized companies, bought furniture and books, and set up shop as a Life Insurance Company. The business was tampered with to an extent which had never fallen to the lot of any other business. Of the seventy-two companies in 1871, it is probable that not thirty of these had educated Life Insurance men at their heads. What could one expect as a result of this craae? Could one suppose that it would meet a fate different from that of all other Dusiness handled by men who know noth- ing of it? Let any sensible man answer the questions. Could one have expected these companies to succeed? People do not buy their hats of shoemakers, nor do they buy shoes of tailors. Afarmer or a butcher could undoubtedly cut off a leg, but he would be sure to kill his patient, A well educated physician would surely make a failure in trying an intricate law case, and an expert attorney would doubtless be capsized in trying to sail a boat. The trouble, and the sole trouble with the mushroom Life Insurance Companies was that men undertook to do what they did not know how to do, and they failed, just as it was cer- tain that they would fail." ''Taking every organization that ever did any business in Life Insurance, and the record is that seventy-seven companies have been in the business that are not now in the business. These com- panies are as follows : (Here is a list of these companies.) There have been a few other futile attempts to establish a Life Insurance Company, but the foregoing is a list of the companies that came before the public for business, and that did business of any consequence." ** Some of the above-named companies failed outright, some of them reinsured their risks in other companies, which afterwards failed, others of them reinsured their risks in companies which OF LIFE INSUBANCE. 56 are solvent, and which have carried out all of the onginal con- tracts, and some of them did not do any business at all. The fol- lowing table shows the assets of fifteen of the larger of the com panics at the last annual rejjort, before they ceased business. The assets of the other companies are stated with just as much preci- sion, but are placed in one sum: Knickerbocker, N. Y |6,033,231 North American, N. Y 5,789,074 Globe, N. Y 8,613,291 Continental, N. Y 6,229,484 Security, N. Y 3,683,186 Life Association, Mo 3,043,538 St. Louis Mutual, Mo 6,195,329 Universal, N. Y 3,542,320 Guardian, N. Y 3,976,976 New Jersey Mutual, N. J 1,808,882 Atlantic Mutual N. Y 1,252,016 Widows' and Orphans', N. Y 1,599,068 Republic, Dl 2,034,541 World. N. Y 344,258 All other companies 11,493,145 Total $60 638,339 '*It will thus be seen that the total assets of all the companies that have failed in this countiy, given in the last annual report before they failed, was about $60,000,000. But, as before saia, in a number of cases the risks were safely reinsured in other com- panies. The amount of these reinsurances, at a safe estimate, would reduce the amount to $40,000,000. Then, again, the fail- ures were not absolute. In some cases nearly the whole liability was saved. In others a large portion was saved. It is not prob- able that over half the amount was really lost. Still, it may be, and probably is, true that $25,000,000 have been lost by those Life Insurance Companies that failed." "When we look at the enormous business of Life Insurance in this country, and at the great good it has accomplished, the life insurance failures seem very small compared with the failures of banks in the last forty years, or with failures in any other class of business, the amount is small indeed." The article then goes on to state the amount of losses that these companies paid while doing business. They are given in detail and amoimt to $41,208,015. It concludes with the following: *' Compare the amount of money lost by Life Insurance Com- panies which have failed, and the good accomplished by these very companies in the payment of over $41,000,000 of losses, and give credit where credit is due. Can any other business show as much good accomplished where the business has resulted in fail- ure? But there is another perfectly just way to look at the money lost by failed Life Insurance Companies. It is a large estimate to call the amount $25,000,000. The Life Insurance Companies, as has been shown previously, have assets of about $500,000,000. They have paid dividends of about $250,000,000, and thev have paid in purchase of policies before maturity about $150,000,000. If this amount be added to the amount used in 56 THE THREE SYSTEMS expenses of management, we may say that the Life Insuraiice Companies of this country have handled about $1,500,000,000,' and that, in doing so, some inexperienced men, who engaged in the business and failed, lost $25,000,000. Take the business in any way, look at it from all sides, and then make the record, and tell the results. " Let the record be told as it is. Say it boldly. Between one and two per cent, of the money handled by the Life Insurance Companies has been lost by bad management. If the wisest men in the world had conducted all of the business, we could not have expected better results. Let any man who is disaffected as to life insurance, because some companies have failed, look at the facts as they are, and he will forever after conopliment the business rather than criticise it adversely. The result is in favor of the business. It is complimentary in every way." LIFE INSURANCE EXPENSE& The following figures with reference to the comparative ex- pense of Life and Fire Insurance companies are compiled from tables found in the Insurance Year Book, 1885-6; those referring to Railroad corporations, from Poor's Manual, 1885: Total income of 47 Axnerioan Life In- surance OompanieB, from 1879 to 1884, inclusive, six years $532,899,9d4 Total premium income for the same time 377,639,310 Total expenses for the same time 77,217,951 Ratio of expenses to total income 141 P^r cent. Ratio of expenses to premium income. . . . 20§ per cent. Total income of 311 American Fire and Majine Insurance Compa- nies, from 1879 to 1884, inclusive, six years $84,505,401 Total expenses for the same time 26,877,298 Ratio of expenses to total income 31^ per cent. Total income of 24 Foreign Fire and Marine Insurance Companies doing business in the United States from 1879 to 1884, six years $26,322,374 Total expense for the same time 8,107,447 Ratio of expenses to total income 30^ per cent. Total gross trafllc earnings of the Railroad companies of the United States from 1880 to 1884, inclusive— five years. . $3,680,182,328 Total net traffic earnings the same time. . . 1,369,754,581 OP LIFE INSURANCE. 57 Total expenses for same time 2,310,424,742 Ratio of expenses to gross traffic earnings. 62| per cent. The Hon. EOizur Wrisrht, in 1863, said: ** The proper office expenses of the companies, apart from the use of the press to enlighten the public mind, are usually very moderate compared with those of most other moneyed corpora- tions. To these must be added taxes and legal expenses, indis- pensable to protect the common fund against the raids of fraud." Also the following: ** The expenses of management do not ordinarily increase in proportion to the business, but it is in the largest companies that the largest percentage of the premium has either returned to the policy-holders or is accumulated for their benefit." These statenient are doubtless as true to-day as in 1863, as shown by the comparison just made of the expenses of Life Insurance companies with those of Fire and Marine compa- nies and Railroad companies. But, as a safe test of the economy of one life insurance company with that of another, in matters of expense, the comparison of expenses with total or premium in- come is questioned by some of our best thinkers on the subject. Mr. 'Wright said, in 1873 : " When two companies are to be compared in regard to the economy of their working expenses, comparing their respective ratios of expense to either total or premium receipts is about as idle as it would be to count the buttons on the clothing of their respective presidents." One of the oldest, most conservative, and best managed Life Insurance companies in the United States takes the position that the ratio of ffross insurance expenses to net insur- anoe claims met, during any year, is the only clearly intelli- gible and scientific test of the economy of expenses. The company . illustrates this new test by reference to its own record of business in 1884, as follows: Gross expenses $360,170.17 Deduct investment expenses 74,757.00 (1) Gross insurance expenses 285,413.17 Gross death claims 973,693.00 Deduct the part paid by premium reserve. . . . 328,217.49 (2) Net death or insurance claim 645,475.51 Exact ration of (1) to (2) 44.2 per cent. " An inspection of these figures is sufficient to show the prin- •ciple involved, which is simply to distinguish insukance from in- 68 THE THREE 8T8TE318 VESTMENT 0X060868, 80 that it mav b6 8660 that each braocb of business has neon conducted with due economy." ''Under ordinnrj' circumstances, insurance expenses ap- proachinji: the full value of insurance furnished, or amount of insurance claims paid, should be re^^rded as extravagant ; and INVESTMENT EXPENSES SO large as to defeat the realization of a fair rate of interest on investments should also be so regarded/' This new test is further illustrated by the company, as follows: *'This company's ratio of gross expenses to gross income for 1882 was 12.7 per cent., and to the mean amount of its policies in force, 0.57 per cent. The reader will at once perceive that these figures convey no conclusive or pr^ictical idea to him, such as he is given when he is informed that the Insurance Expenses bear a certain proportion to the Insurance Claims Paid. Ex- penses muj' be incurred by a company amounting in a given year to more than 100 per cent, of the insurance claims paid, or real in- surance service rendered by it, in the same year, which, of course, would be highly extravagant, and yet the extravagance might escape detection in a comparison with income, or the amount of policies in force ; for the amount of expenses, notwithstanding their extravagance, would still be far below either of these amounts." In illustration of the unreliability of the ratio of gross ex- penses to gross receipts or premium income, as a test of the economy of one Life Insurance Compuiij' as compared with another, the leader is referred to the official report of the Insur- ance Commissioner of Massachusetts, Jan. 1, 1874, pages xxxii to xxxvi, inclusive. In the example there cited, by a skillful mani- pulation of figures, the ratio of expenses to gross receipts was reduced from 14.38, the correct ratio, to 8.76 per cent.; and the ratio of expenses to premium receipts was reduced from 20.16, the correct ratio, to 10.6 per cent. I OP LIFE INSURANCE. 59 CHAPTER VL The Level Premium System. — Its Distinguishing Charac- teristics.— Requisites FOR Soundness and Permanency.— Analysis of a Premium.— The Reserve Element. — The Mortality Element. — The Expense Element. — Sources OF Dividends. SYSTEMS OF LIFE INSURANCE. Three systems of Life Insurance are operated in this country under the protection of law. They are The Level Premium System, sometimes called "Old Line*'; The Natural Pre- xniuxn System, and The Assessment System. These are discussed in the following pages in the order named. I. The Level Premium Sy6tem. Distinguishing Characteristics: 1. The premium is required to be paid in advance, 2. The contract between the company and the in- sured is called a "policy" 3. The policy always desisrnates a definite sum to be paid by the Company to the beneflciaiy, or beneficiaries, named therein. 4. The premium is a ** level premium ;" that is, it is the same from year to year, duringr the pre- mium paying" period, unless reduced by dividends. 6. The policy-holder is never insured for the full face value of his policy and additions. His insurance is only for a sum equal in amount to the difference of these and their reserves. Requisites for Soundness and Permanency. a. — The premium must be based on safe assumptions of future mortality, interest and expenses. 60 THE TURER SYSTEMS To illustrate.— Let it be required to make an annual premium, at age 40, for $1,000 of insurance, on the Ordinary Life Plan, basing it on the Actuaries* Table of Mortality and 4 per cent, in- terest. It is first assumed that, of the 78,653 persons living, at age 40, at the beginning of the year, 815 will be dead at the end of the year, and, also, that the nnmber living and dying every year, thereafter, will be as represented in the table. Theassump tion is that the future mortality of the Company will be as thus represented and this assumption is regarded, by all com- petent actuaries, the world over, as a perfectly safe one. It is also assumed that 4 per cent, compound interest will be received, by the company, on the reserve accumulations of the policy, and this is also regarded as a safe assumption. On these assump- tions of future mortality and interest, by a process not necessary to explain here, the net annual premium is found to be $23.68. It is then assumed that $7.89, annually, will be a safe contribu- tion for expenses. Adding these two, the result is $31.57, which is the gross annual premium, at age 40, for $1,000 of insurance, during life. The assumption of future expenses is entirely arbi- trary and varies with different companies, ranging from 25 to 40 per cent, of the net premium. ft. —The Ooxnpajiy must have hi hand, from yeax to year, the accumulations of reserve provided by lavr, safely invested in securities eaminsr a, rate of interest not less than that assumed in makingr the premium. If a higrher rate be realized, a divi- dend can be paid. To illustrate. — Suppose that the insured is 40 years old at the beginning of the^r*^ policy year; that the policy is for $1,000, Ordinary Life, and that the premium is based on the Actuaries' Table of Mortality, and 4 per cent, interest. The net annual premium is $23.68, and it is also the required legal reserve, at this, the beginning of the first year; but it gradually diminishes until, at the end of the year, it is only $14.41. The difference be- tween the legal reserve at the beginning, and at the end of the year, — $9.27 — , is supposed to have been used in payment of death claims. At the beginning of the second policy year, after the premium for the year has been paid, the net annual premimn, — always $23.68 — , is added to the legal reserve at the end of the first policy year, $14.41, making $38.09, which is the required legal reserve at the beginning of the second policy year. This, also, as during the first year, gradually diminishes, until, at the ^nd of the year, it is $29.31, which is the legal reserve at the end of the second policy year ; and so on. It will be noticed that the legal reserve at the end of any policy year is always larger than it was, at the end of the last preceding year; and, also, that the re- OF LIFE INSURANCE. 61 serve, at the end of any policy year added to the uniform net annual premium, at the age when the policy was issued, gives the legal reserve at the beginning of the next policy year. At the end of the first policy year, as has been shown, the legal reserve is $14.41; at the end of the second policy year it is $29.31, gradu- ally increasing from year to year, until at the age of 100~in case of a life policy, based on the Actuaries* Table of Mortality — it is equal to the face value of the policy. c — Qood Mcuiagrexnent. Under the Level Premium System the larger and more promi- nent companies, both in this and in foreign countries, are doing business. For convenient illustration, let it be assumed that a policy of $10,000, Ordinary Life plan, annual premium $264.90, has been issued on a life at age 35. This premium, the first year, is composed of the following elements, premising that it is based on the Actuaries' Table of Mortality, and four p(;r cent, interest: 1. The Reserve Elexnent $110.39 2. The Mortality Element 88.27 3. The Expense Element 66.24 Qross Premium $264.90 The Reserve Element. — ^Upon payment of the first annual premium of a Level Premiiun Policy, insurance law and mathe- matics require that a part of it shall be invested by the company and compounded, annually, at a certain rate of interest — usually four, or four and one-half per cent. — until the policy becomes a claim by death or maturity. Then it is applied in part payment of the claim. A part of every succeeding year's premium is also required to be thus invested . The accumulation of these investments is technically called ''the reserve." This reserve be- comes larger and larger the longer the policy remains in force, until it equals in amount the face value of the policy, at age 96 or 100, if a life policy ; or, at the end ot the endowment term, if an endowment policy. A Level Premium Company, not having in hand the reserve prescribed by the state from which it received its charter is not solvent, and, when it would enter other states for business it must comply with the reserve laws of those states. The reserve should not be confounded with surplus. It is not surplus. It may produce surplus, as will be seen further on. The reserve can be used for no purpose whatever while the original policy is in force, except for accumulation. If a note has been given in part or full payment of a premium, it is a part of the reserve. If a policy were to be sold, to the company or another party, the reserve, at date of sale, indicates its cash value. If the 63 TIKE TUKEE SYSTEMS original policy were to be exchanged for a similar, smaller one, a paid up, one upon which further payment of premiums would not be required, the reserve determines the amount of such paid-up. It would be what the reserve would pay for at your then age, according to the rules of the company. By referring to Table Ko. 19, it will be seen that the reserve on the assumed policy, at the end of the first year, is $114.81, and at the end of the 65th year, $10,000. If the policy were for a different amount ; or, for the same amount at a different age ; or, in general, if the age, kind or amount of policy, either or all of these were different in any respect, then the reserve would be different. It is assumed that the reserve on this policy will earn four per cent, compound interest ; that, during the first policy year, $88.27 will be used in payment of death claims, and $66.24 for expenses, and similar amounts every year thereafter. If these assumptions be realized, no more and no less, and no divi- dends or profits accrue from other sources to reduce the premi- imis, then the insured will pay the Level Premium of $264.90, every year, during life. Thus paying, for the whole term of life, he will be insured, not for $10,000, but as follows : At the end of the first policy year, $9,885.19 ; at the end of the tenth year, $8,665.88 ; at the end of the fifteenth year, $7,857.00 ; at the end of the thirtieth year, $5,158.62, and so on, for a decreasing amount, year after year, until, at the end of the sixty-fifth year, at the age of 100, he will have no insurance, as the reserve will then just exactly equal the face value of the policy. It is a very remarkable characteristic, therefore, of "The Level Premium System ", that a policy-holder is never insured for the full face value of his policy and additions I His insurance is only for a sum equal in amount to the difference of these and their reserves. Twenty-seven Level Premium Life Companies reported to the Massachusetts Insurance Department, Dec. 31, 1884. According to their sworn statements, in these reports, their net total assets amounted to $469,898,831. Their reserves amounted to $418, 285,178! The reserves, therefore, constituted nearly ninety per cent, of their assets ' ' Amzi Dodd, president of The Mutual Benefit Life In- surance Company, of Newark, New Jersey, one of the largest and oldest Level Premium Companies in the United States, in his Annual Report, Jany. 1, 1883, says, with reference to the reserve accumulations of companies, as follows: " In regard to this fund a few explanatory words may be use- ful. Each policy is credited on the company's books with a sepa- rate reserve, according to its age, kind and amount. It arises from the simple circumstance that the risk of death (and, there- fore, the cost of insurance) increases with each year of life, while the premium which is paid on the policy differs in amount from the cost of insurance. Out of 1,000 persons, living at the age of 35, our American Experience Table of Mortality shows OF LIFE INSURANCE. 63 that nine will die in the ensuing year. Out of 1,000 living at the age of 45, eleven will die ; out of 1,000, at 55, eighteen; out of l^m, at ^y forty; out of 1000, at 70, sixty two; out of 1,000, at 80, one hundred and forty-five ; at 85, two hundred and thirty- six; at 90, four hundred and fifty four ; at 92, six hundred and thirty -five ; at 94, eight hundred and fifty seven ; at 95, one thou- sand — that is to say, by the table, life is not extended beyond 96. "From the above figures it appears how the cost of insurance increases yearly. This increasing cost would be the natural premium. For the sake of convenience, the sum ordinarily agreed to be paid in each year, is different, and is called the artt- ficial premium. During many years after the policy is issued, the artificial premium is greater than the natural, and in after years it is less. In case oi a policy issued at the age of 35, the artificial premium is greater than the cost of insurance till the in- sured reaches the age of 56. After that age it grows rapidly less. **Out of this state of things arises the whole matter of reserves, so fundamental and so much discussed in Life Insur- ance. Simple as it is when stated, it is remarkable how often it is imperfectly, or obscurely conceived. If the policy contract, instead of calling for the same premium each year, should call for the gradually increasing natural premium, there would be no neea of reserves or accumulated funds. The Company and its members would do business on the rule of '* pay as you go." The policy-holder would get yearly the equivalent of his money f)aid. But under the system almost universally in use he pays argely in advance, and the Company holds the money to offset against insurance in after years, when the insured does not wish to be called on for larger payments. The reserve fund thus aris- ing is sometimes called the wealth of Life Insurance Companies. It IS obviously not such ; but a debt from the corporation to its members : a great trust fund confided to the managers. ** The foregoing will serve to indicate several points to which only a brief reference need now be made : Firstly— TIiq para- mount importance of keeping an ample reserve fund securely in- vested. It is vital to the fulnllment of the company's contracts with its members. Secondly — Why it is that a company should make an equitable allowance for the value of a policy when the holder can no longer pay premiums, or from any cause discon- tinues them. The company has in its hands a reserve for the policy, the most of which it can return either in cash or in the form of insurance, without injury to its other members or policy- holders. The reserve is held for the future needs of the policy, and when such needs cease to exist a fair return can be made." The Mortality Element. — The name sufficiently indicates its use. In the premiums under analysis, it is $88.27 the first year. Theoretically, this is the maximum amount chargeable to the insured, in any one year, as his contribution to the death fund, but, practically, this element of the premium and the ex- pense element are merged together. Sometimes the death rate is in excess of that assumed, and the expense element is drawn upon to make up the deficiency, and vice versa. Column (3), Table No. 19, shows the amount of insurance, from year to year, that the company has at risk on the assumed policy. It is at all times the excess of the face value of the ipolicy over the reserve in hand. When the insured dies, this ex- 64 THE THREE SYSTEMS cess or amount at risk is paid from the Mortality Elements of the premiums of surviving policy-holders. To illustrate, suppose death occurs at the end of the tenth policy year. The reserve is $1,334.12. This lacks $8,665.88 of paying the $10,000. This de- ficit, therefore, must be paid from the Mortality Elements of the surviving policy-holders* premiums, as stated before. According to the Actuaries' Table of Mortality the cost of in- surance, at age 35, is only $9.29 for each $1,000. At age 50, it is $15.94 ; at age 60, it is $30.34 ; at age 70, it is $64.93 ; at age 80, it is $140.41 ; at age 90, it is $323.73 ; and at age 99, it is $1,000 for $1,000 of insurance 1 From this it is seen that, if no accumu- lations were held in reserve, under The Level Premium System, the death rate would eventually be so large that the entire pre- mium, — the three elements combined — , would be insufficient for the payment of death losses, alone, saying nothing of expenses. But the constantly increasing reserve is continually diminishing the amount of insurance at risk, so that the decrease of risk neu- tralizes the increase of mortality. The Expense Element.— ** The net premium," says Gusta- vus W. Smith, **is the amount that will, on the designated data — namely, rate of interest and table of mortality — exactly effect the insurance." "Loading"— The Expense Element,—, says Elizur Wright, "is the addition which is made to the 'net premium,' to provide for commissions and other working expenses, and for occasional excesses of mortuary loss." In the premium under analysis the expense element is $66.24. This is the assumed, maximum, annual charge against the in- sured for expenses. By adding the reserve and Mortality Ele- ments of any premium, we obtain what is called the ** net pre- mium" which, in the example selected, is $198.66 ; then, by adding The Expense Element, we obtain the Gross Premium of $264.90. Net premiums, — age, kind and amount of insurance being the same. — are the same in all Level Premium Companies that base their rates on the same Mortality Table and rate of in- terest ; but the Gross Premiums are most always different, be- cause of the difference of the Expense Elements. Of two Level Premium Companies, one has been charging a Gross Premium of $313.00, and the other only $266.10, for $10,000 of insurance, life plan, age 40, the first year. Their net premiums are the same, but the Expense Element of the former is $89.46, while that of the latter is only $42.56. The dividends at the end of the first year, if used in part payment of premiums, would possibly reduce the second year's payment in each to about the same amount, and, after a few years, the higher price company, at first, might prove to be less expensive in the long run. The Reserve and Mortality Elements are determined by care- OP LIFE INSURANCE. 65 ful mathematical calculations, while the Expense Element, or " loading/' as it is technically called, is entirely arbitrary. SOURCES OF DIVIDENDS. In the Level Premium System. 1.— Dividends arising from havinsr received a higher rate of interest on the reserves than that as- sumed. — It has been stated that the reserves of every company must be invested and compounded annually, at a certain rate of interest, fixed by law. In the example selected, we assume the rate to be four |)er cent. If only four per cent, be realized, there can be no dividends from this source. But, suppose, for illustra- tion, that the reserve earns six per cent, compound interest, or two per cent, more than that assumed. By referring to col. (5), table No. 19. it will be seen that this gives a dividend, end of 1st year, of $2.30; end of 5th year, |12.26; end of 10th year, $26.68; end of 15th year, $42.86; end of 20th year, $60.26; end of 25th year, $78.50; end of 30th year, $96.92; end of 35th year, $114.64; end of 40th year, $131.00; end of 45th year, $145.62; and at the end of the 65th year, $20011 Columns (4), (6), and (7) show what the dividends would be if the reserves were to earn five, seven or eight per cent, compound interest. One of our most prominent Life companies realized an annual average of eight and one- guarter per cent, compound interest on its reserves, from 1872 to 1883; but in 1883 it was only a trifle more than six and three* fourths per cent., which, although much reduced, was very high in comparison with that of some other older companies. Another company that received seven and one-fifth per cent, interest on its reserves in 1873, realized Jess than five per cent, in 18831 This reduction of interest has but little effect on the dividends of poli- cies that have been in force only a few years, when the reserves are comparatively small; but, on old policies with large reserves there has been a marked reduction of dividends. The companies should not be censured as it could not be avoided. Agents and solicitors of comparatively young companies have sometimes seized upon the fact of this large reduction of dividends on old policies in the older companies, and made it the basis of severe and unjust criticism by comparing recent^ with former dividends on the same policies before interest had dropped. The reserves of the Level premium companies doing business in Massachusetts last year, as shown by official reports, Dec. 31, 1884, amounted to $418,285,178. If only five per cent, interest be realized on these reserves during the present year, the dividends resulting therefrom will amoimt to over four millions of dollars; if six per cent, be realized, the dividends will be more than eight and one-third millions of doUars; and, if the reserves earn seven 66 THE THREE SYSTEMS per cent, the dividends will be over twelve and ont-half millions of dollars// 2.— Dividends arisinsr troxn havinff ezperienoed a less mortality than assumed. — The mortality element of a premium is the assumed maximum annual contribution of the insured for the payment of death losses. In the premium under analysis it is $88.27 If it be not all used for that purpose, the unused portion will be returned to the policy-holder at the end of the policy year, improved by interest, as an element of his divi- dend for that year. Dividends from this source, in our best con- ducted companies, where extreme care has been exercised in the selection of sound lives, have been quite large, amounting some years to twenty or even thirty per cent, of the assumed mortality. So long as the actual mortality, among the members of a com- pany, is less than the mortality indicated by the table upon which its premiums are based, there will be a constant annual surplus for dividends from this source. If a company be National in character, with its business sufficiently large for a safe average, and quite evenly distributed over the whole country, there need be no apprehensions of serious trouble from epidemics, wars, earthquakes, etc., etc. The great law of mortality operates with as much precision as the laws of light, heat, electricity and cavi- tation. Several years ago a special agent of a New York company was sent on business to one of its General Agencies in New England. While there, the General Agent remarked that he had one policy-holder who was always grumbling. His policy was for onlj' $1,000, but his fniitful imagination was constantly conjuring up something that might possibly happen to the company and his policy thereby become worthless. Sometimes it was one thing, and at other times, another. Just at that time he was fearful that some fatal epidemic might sweep over the country', and, if not all, a very large percentage of the policy-holders of his company would suddenly die and the company thus become hopelessly insolvent. The general agent expressed a desire that the special should have an interview with this troublesome policy-holder. An interview, therefore, was arranged, and in a few hours the special agent and the vexatious policy-holder confronted each other in the private office of the general agent. After customary preliminaries, the policy-holder said, "What are the assets of your company? " ** 25 millions of dollars " was the reply. '* What amount of insurance has the company in force?" was the next question. "165 millions of dollars" promptly responded the special. "Now, sir," rejoined the policy-holder, "suppose all your policy-holders were to die before to-morrow morning, how could the company pay 165 millions of dollars, when, according to your statement, just made, it has only 25 millions of dollars to OP LIFE INSUBANCE. 67 pay it with?" The special agent replied, "I will answer your questions by asking another. I will suppose you have three sons whose ages are five, ten and fifteen years, respectively, and that you have decided to make a permanent investment by which each of these sons shall receive, at age 21, $1,000 in cash. Your yoimgest son will be 21 in 16 years; the next older, in 11 years, ■and the oldest son in six years. Assuming that money will earn four per cent, compound interest, you find that $533.90 will ximount to $1,000 in sixteen years; $649.60 will amount to $1,000 in eleven years, and $790.30 will amount to 1,000 in six years. You make your investments, accordingly, and you have the best of reasons for believing that each of these sons will receive the $1,000 thus provided for at the age of 21. You know that six- teen years must elapse before the youngest son will be 21 ; the next older will not be 21 until the end of eleven years, and it will "be six years before the oldest son will be 21. But what if all three of these sons were to become 21 years old to-morrow^ Your investments would not pay the $3,000, would they? If all our policy-holders were to die before to-morrow morning, it would be a phenoipenon as exceptional as if your three sons were to become 21 years old to-morrow. In that event our 25 millions of dollars would not pay the 165 millions of dollars any more than your investments would pay the $3,000. One event is as likely to occur as the other." 3.— Dividends arisinsr from the expenses havinsr been less than those assumed.— If the expense element of a premium, which, in the example for illustration is $66.24, is not All needed for the purposes indicated, the balance is paid back to the insured, with interest earned, at the end of every policy year, as an element of his dividend. In looking over the records of the companies for a series of years, it will be seen that their ex- penses have averaged from about $5.00 to $15.00 per annum for each $1,000 of insurance in force. The lower averages, with rare exceptions, are those of the older companies having large amounts of old business on their books, in which the agents have no renewal interest. This showing, however, is to some extent delusive. There are three well defined periods in the expenses of every company's business, — (1), the expense of procuring new business; (2), the expense of taking care of it after the first year and until the agents' renewal commissions terminate; (3), the expense after the renewal commission period. If our insurance laws would require every company to report its expenses during each of these periods, separately, one would probably be better qualified to judge more accurately of the comparative merits of ttie companies, in this respect. 4. Dividends from Lapses and Forfeitures. A policy is said " to lapse" if the premium is not paid when due. 68 THE THREE SYSTEMS If the Company accept the policy afterwards, upon certificate of health, or otherwise, the policy is then known as a ''Restored Policy" A policy is *' forfeited'" when one or more of its con- ditions of non- forfeiture are violated. These conditions vary in the different companies, and in the different kinds of policies issued by the same company. The margins made, therefore, on lapses and forfeitures, depend not only upon the company that issued the policy, but also upon the kind of policy issued. A policy, in some companies, may lapse and not he forfeited; or, it may be forfeited without lapsing. In other companies a lapsed policy is also b. forfeited policy, until restored, or a paid-up be issued in exchange. Every kind of a policy in every company will lapse, if the premium be not paid when due; but the conse- quences to the policy-holder, of the lapse,would be widely different in different companies and in different forms of polices. If a Ton- tine Policy, it may be restored to its original condition by paying the unpaid premium within 60 or 90 days, witJl accrued interest. If not restored within the specified time, it becomes a forfeited policy, and all the reserve and dividend accumulations will be finally paid to the persistent members of his Tontine class; if a Semi-Tontine Policy, having been in force three or more years, it may be restored as in the case of d^full Tontine, or the insured may exchange his semi-Tontine, within a specified time, for a paid-up, forfeiting only his accumulated dividends. If the lapsed policy is a Life or Endowment Policy, having been in force two or three years, the consequences depend entirely upon the policy contract of the company that issued it. If in a a certain class of companies, it may be restored — upon giving certificate of health — , or exchanged for a smaller paid-up, ♦/ attended e provisions of the law. If desired, the amounts of cash sur- render values and Paid-up Insurance will be put upon the Policy, and their payment guaranteed by the company. It is believed that this law — which applies only to Massachusetts companies, and not to Foreign companies represented in the State — is the nearest approach to equity yet reached by State legislation. No other State has, upon its Statute Book, a law compelling com- panies to give to the insured an equivalent for the amount of premiums they have paid. (Signed) Benj. F. Stevens, President' OP LIPB INSURANCE. 7& A letter received from Walter C. Wright, Actuary of the New England Mutual Life Insurance Company, imder date of Sept. 10, 1885, written during the absence of President Stevens, closed with the following sentence: '' We endorse vcUites on all policies, and we are well satisfied^ with the working of the law.*' From the State Mutual Life Assurance Co. ** Worcester, Mass., Sept. 22d, 1885. Mervtn Tabor, Esq., Actuary Insurance, Dept., Illinois. 185 Dearborn St., Chicago, 111. Dear Sir. — Our interpretation of the Non-Forfeiture Law of this State upon the points which you inquire about is this: In most cases a policy-holder when his policies lapse has the option of deciding whether he will take the cash surrender value of the same, or let it stand for a paid-up Insurance value as determined by the law. After lapse, if there be minor or dependent children, the cash surrender value cannot be paid to the insured. While the Company is under no obligation to pay cash surrender values except at the anniversary of the policy after the second, it fre- quently does pay these values at other times when asked to do so by the policy-holder. As, in nine cases out of ten, the cash sur- render value is requested while the policy is still in force, fre- quently, therefore, the existence of minor or dependent children does not prevent payment. The distinction you see is this: The law applies only to lapsed policies, and gives the minor or de- pendent children a vested interest in the cash surrender value so that it cannot be paid to the insured. As we generally deal with policies that are m force we make the payment of the cash sur- render value to the insured whether there are minor children or not. I believe this covers the questions you ask. Yours very truly, (Signed) A. G. Bullock, President.** From the Massachusetts Mutual Life Insurance Oompany. " Springfield, Mass., Sept. 11th, 1885. Mbrvin Tabor, Actuary, 185 Dearborn St., Chicago, HI. Dear Sir. — Your favor of the 8th came duly to hand. I have asked our Secretary and Actuary to give me their interpre- tations of the sections of Chap. 119, of Mass. laws referred to by you. Their replies I enclose herewith, and I trust they may an- swer your purpose. These opinions were written independently; each officer being ignorant of what was written by the other, and so they may fairly be said to represent the company's understand- ing of the law. I would add that I fully concur with the views expressed in these letters Yours truly, (Signed) E. W. Bond. President.** 76 THE THREE STSTE^fS ** Springfield, Mass., Sept. 11th, 1885. E. W. Bond, President: Dear Sir. —As requested by you, I have read Mr. Tabor's letter of the 8th inst., and to the questions therein, I reply as follows: " Our understanding of the Massachusetts Law of 1880, is that at any of the times when a cash value would be claimed, as a right, by an insured person who had no minor or dependent child, the same cash value may be asked as a favor by an insured person who has a minor or dependent child, and the company may law- fully comply with this request, if a proper surrender can be ob- tained from the insured and the beneficiaries. In practice, this company is in the habit of so complying, but it does not bind it- self to pay cash values in cases where the same are not reouired by the law, except that it a^ees to pay the cash values on fifteen and twenty payment life policies (on the all cash plan) after they have become fully paid-up. on full surrender of each such policy on the anniversary of its date. Very truly, (Signed) Oscar B. Ireland, Aetttary." Springfield, Mass., Sept. 11, 1885. B. W. Bond, Esq., President: Dear Sir. — In response to your request that I give you my interpretation of the so-called Non-Forfeiture Law of 1880, I would say that according to my understanding of sections 161 to 166, Chap. 119 of our Public Statutes, we cannot be compelled to pay the cash value fixed therein for a policy issued under the law, no matter whether the policy be written for the benefit of one's estate or for the benefit of wife, children or other persons, except when the insured has no minor or dependent children. When the insured has no minor or dependent children, he may insist upon such cash value, provided his wife or any other beneficiary mentioned in the policy, joins in the surrender to the company; and if the insured be in a condition to insist upon the cash value, he can only claim it on a second or subsequent anniversary of the policy, llie law places no obstacle whatever in the way of the company's buying its policies issued under it, for cash, if they choose to do so, even when the insured is not in a condition to insist upon a cash value, provided the insured desires cash, and can give a clear and valid surrender of the policy by himself and all beneficiaries mentioned therein. Our practice is to buy Act of '80 policies, paying their legal cash value after two years, provided we can get a valid surrender by the insured and all beneficiaries mentioned in the policy, but we at all times, reserve the right to stand upon the conditions of the law, if any circumstance should seem to make it advisable for the company to do so. The values under the law under consider- ation, both in cash and paid up insurance, are endorsed on thie back of our policy, and the printed matter in connection with the law itself, which is printed on the policy, plainly shows the rights of the insured and the rights of the company. To two classes of policies issued by us, viz: 15 and 20 payment life policies, on all cash plan, we attach a rider, agreeing to pay the legal cash value at the end of 15 or 20 years from the date of OF LIFE INSURANCE. 77 the policy, or on any anniversary thereafter; provided we can get a valid surrender of the policy, regardless of whether the insured has minor or dependent children or not. You of course know that under such a policy, it might occur that the insured could demand the cash value of his policy at any time within the 15 or 20 years; so that our voluntary agreement embodied in the rider mentioned, may be said to be a promise addition^d to the rights to which the law entitles him; and a waiver of a right which might exist at the end of these terms to decline to pay the cash value. I enclose a copy of the rider referred to, and also the back of our policy form; these show just how this matter is set forth to our members. Very respectfully yours, (Signed) John A. Hall, Secretary.** The following is a true copy of the " rider " referred to in the letter of Secretary Hall, for a 15-annual payment life policy. The rider for a 20-annual payment Life policy is the same, except "twenty" is inserted in place of "fifteen." ** After the payment of fifteen annual premiums, wholly in cash, on this Policy No. , the cash surrender value of the Policy, (computed according to the method described in. sec- tions 162, 163 and 164 of chapter 119, of the Public Statutes of Massachusetts) will be paid on the fifteenth or any succeeding anniversary of the date of its issue, upon full surrender of the Policy to the company by all parties in interest. " Printed on the back of the policy to which this " rider " is attached, is the following: '*Cash surrender values can only be claimed when the insurable interest has terminated; see sections 164 and 165 of the law." From The John Hancock Mutual Life Insurajxce Oompany. ** Boston, Mass., Sept. 14, 1885. Mervin Tabor, Esq., Chicago, m. Dear Sir. — Enclosed please find form of our policy contract, from which you will please observe that **the cash surrender values secured by law and those voluntarily offered by the com- pany's indorsement of the same " are identical. Very truly, (Sijrned) S. H. Rhodes, Pres't,** On the back of the policy referred to is a table of cash, and paid up, values, over which is printed the following: 78 THE THREE SYSTEMS ** The followin|2: table shows the amount of cash that can be realized on this policy at end of any year, provided the insurable interest as expressed in the statute (see above) has ceased; also, the amount oi paid up insurance due at death (or if an endowment policy at end of endowment period) in case of non-payment of any premium." From The Berkshire Life Insuranoe Ck>inpany. PiTTSPiELD, Mass., Sept. 14, 1885. Mr. Mervin Tabor, State Actttary, dc, 185 Dearborn St., Chicago, Dl. Dear Sir.— In answer to your favor I would say that this office passes upon each application for surrender of policies, and determines as to what is necessary to secure for the company a ^ood acquittance. Our counsel does not construe the act of 1880 as obliging the company to pay a cash surrender value if the in- sured has a minor or dependent child. The company has always -endeavored to be liberal, in the construction of such laws as affect the interests of retiring members, but until the Act receives judi- cial construction by courts of competent jurisdiction, no claim as to its practice will be made in its behalf. I am very respectfully, (Signed) James W. Hull, Secretary. Thus we have, in the foregoing correspondence, the full bene- fit of the construction of the present Non-forfeiture law of Massachusetts, by every Life Insurance Company affected b}' it. These companies have also given us, in an open, candid and frank manner, their practices under the law. They have not dodged a single point in our letter. They are evidently living up to not only the letter, but also the spirit, of the law ; and, judging from this correspondence, we conclude that whenever a doubt arises as to the real meaning of the law they give their policy-holders the benefit of such doubt, if they can do so with- out involving themselves and consequently their membership — for they are all Mutual Companies — in legal complications that might possibly arise through the instrumentality of designing and unscrupulous parties . The following assumed examples sufficiently illustrate the benefits of the law : Example 1. — Amount of Policy, |10,000 ; Age of the Per- son Insured, 41 ; Kind of Policy, Life Rate Endowment Re- quiring AN Annual Premium of i32Q.^^,—less the annual cask dividend — , unth. the Insured Shall Attain the Age of 76, AT "Which Time the Policy wn^L be Paid in Full as an En- "DOWMENT ; OR, AT DEATH, IF IT SoONER OcCUR. OF LIFE INSURANCE. 79 Age at Issue , 41 ; Age at Maturity, 76 ; Amount t $10,000. Annual Premium, $326.00. Year. Cash-Surr. Paid-up Year. Cash-Surr. Paid-up Value. Insurance. Value. Insurance. 2d $183.60 $ 430 19th $3,903.90 $6,050 8d 363.70 830 20th 4,169.90 6.320 4th 549.00 1,230 21st 4,442.30 6,570 5th 739.50 1,610 22d 4,722.00 6,820 6th 934.50 1,990 23d 5,009.40 7,060 7th 1,134.30 2,350 24th 5,305.90 7,310 8th 1,338.60 2,710 25th 5,612.70 7,550 9th 1,547.40 8,050 26th 5,931.50 7,780 10th 1,761.10 8,390 27th 6,264.20 8,020 11th 1,979.40 3,720 28th 6,614. 00 8,250 12th 2,202.30 4,040 29th 6,984.30 8,490 13th 3,430.30 4,350 30th 7,379.70 8,720 14th 2,662.30 4,650 3l8t 7,805.80 8,960 15th 2,899.80 4.950 32d 8.270.10 9,210 16th 3,142.30 5,240 33d 8,781.80 9,460 17th 3,390.70 5,520 34th 9,353.10 9,730 18th 3,644.20 5,790 J 35th 10,000.00 10,000 Note 1. — In 1883 this company ceased issuing policies payable only at death, or what are commonly called Whole Life Poli- cies ; and, instead, commenced issuing policies payable at death, or after a fixed number of years in case it should not occur sooner, charging precisely the same annual premiums, and called them Life-Bate ESndowments. The reserve law of the State requires a larger reserve accumulation on this kind of a policy, and consequently, the cash surrender and paid-up values, from year to year, are considerably larger than those of a whole life policy issued at the same age and for the same amount of insur- ance, at the expense however of less dividends, in the same com- pany. Note 2. — In the cash surrender, and the paid-up insurance values as given above, it is assumed that all the cash dividends have been used in the reduction of premiums. The paid-up values are what the law guarantees absolutely. The cash values are guaranteed by law under certain conditions fully explained elsewhere. Example 2. — Amount of Policy, $10,000 ; Age of the Person InsuRED, 35 ; Kind of Policy, 20-Payment Life— Special Contract—^KqviRiNQ the Payment of only 20 Annual Premiums of $342, each. 80 THE THBER SYSTEMS Age at issue, a5 ; Amount of Policy, $10,000 ; Policy payable at death. Year. Paid-up Cash Surr. Year Paid-up Cash Surr. Insurance. Value. * «*XftC%a Insurance. • Value. 1st $0,000 $0,000.00 21st $10,000 $5,383.40 2d 663 236.20 22d 10,000 5,502.80 8d 1.192 434.00 23d 10,000 5,623.30 4th 1,717 639.60 ,24th 10,000 5,744.70 5th 2,240 858.60 25th 10,000 5,866.70 6th 2,760 1,076.30 26th 10,000 5,989.20 7th 3,276 1,308.00 27th 10,000 6.111.80 8th 3,790 1,549.20 28th 10,000 6,234.10 9th 4,800 1,799.90 29th 10,000 6,356.30 10th 4,806 2,060.10 30th 10,000 6,477.90 11th 5,309 2,329.90 31st 10 000 6,598.60 12th 5,806 2,609.30 32d 10,000 6,718.30 13th 6,301 2,898.80 33d 10.000 6,836.70 14th 6,794 8,199.20 34th 10,000 6,953.80 15th 7,285 3,510.70 35th 10,000 7,069.40 16th 7,775 3,834.30 36th 10,000 7,183.30 17th 8,267 4,170.50 37th 10,000 7,295.50 18th 8,763 4,520.40 38th 10,000 7,405.70 19ih 9,258 4,884.60 39th 10,000 7,513.90 20th 10,000 5,264.90 40th 10,000 7,620.00 It will be observed that, at the end of the 20th year the policy- is a paid-up for its full face value. No more payments are re- quired. Assuming that the insured has lived through the twenty years and paid his premiums according to contract, in ca^h, he has paid the company 20 times $342, amounting to $6,840, less the dividends. Had he stopped paying premiums at any time after the first two years he would have had, then and there, without any act on his part, paid-up insurance for the amount indicated in the above table opposite the year in which payment of premiums was discontinued. The law of Massachusetts gives him that, and the company endorses it on every policy I There are no exceptions ; the law is absolute and unconditional with reference to paid-ups, in all the Massachusetts companies, after the first two years/ With reference to cash values the law is not so absolute in its requirements. It compels the payment of no cash values excjept when the insured has no minor or de- pendent child. If the insured have no minor or dependent childr and his wife, if he have one, and any living beneficiary or bene- ficiaries naTned in the policy shall join in the application for the cash surrender value, after the payment of two annual premiums, then the law compels the payment of the cash surrender value.^ But the Massachusetts companies, generally, are more liberal in this respect than the law is. In the above policy, for example* the company attaches what it terms a '* rider " by which it guar- OF LIFE INSUBANCB. 81 antees to pay the cash surrender value on the twentieth or any succeeding anniversary of the date of its issue, upon the full surrender of the policy to the company by all parties in interest ; — and, in the Secretary's letter published on a preceding page, he adds, with reference to 15 and 20 payment life policies, on all cash plan, " regartUeea of whether the insured hcM mirror or de- pendent children or not." This contract, therefore, is called a ** special contract" hecBXLse the company gives to the insured a more liberal contraet with reference to cash surrender values than the law requires. In computing the above values — Paid-up Insurance, and cash surrender— it is assumed that the cash dividends were applied, from year to year, during the premium paying period, 20 years, in payment of the premiums. If premiums were paid in ftiU, leaving the dividends to accumulate in the hands of the com- pany, at compound interest, the paid-up and cash surrender values would be very much larger than those named in the above table. The fact should not be overlooked that, on this kind of a policy the cash dividends continue through life, although no pay- ment of premiums is required after the first 20 years. These will be a constant source of income during the balance of life. The amount of this annual income will depend, of course, principally, upon the rate of interest realized on the reserves. Example 3.— Amount of Policy $10,000 ; Age of the Person Insured, 39 ; Kind of Policy, 36- Year Endowmemt RBQUiRiNO Thirty-six Annual Payments of 1324.60, each. Age at Issue, 39; Amount of Policy, $10,000; Age of Ma- turity, 75. Year. Psud-up Cash surr. Year. Paid-up Cash Surr. Insurance. Value. Insurance Value. 1st $000 $000.00 19th $5,953 $3,706.80 2d 405 165.50 20th 6,211 3,963.20 3d 793 332.00 21st 6,464 4,226.30 4th 1,477 505.40 22d 6,712 4,496.50 5th 1,554 684.00 23d 6,954 4,774.20 6th 1,922 867.50 24th 7,192 5,060.40 7th 2,284 1,057.00 25th 7,426 5,355.60 8th 2,635 1,250.50 26th 7,657 5,661.50 9th 2,978 1,449.00 27th 7,885 5,979.60 10th 3,312 1,652.10 28th 8,112 6,312.00 11th 3,637 1,860.10 29th 8,338 6,660.90 12th 3,953 2,073.10 30th 8,565 7,030.10 13th 4,261 2,290.80 31st 8,793 7,423.70 14th 4,562 2,513.60 32d 9,023 7,846.90 15th 4,854 2,741.20 33 d 9,258 8 306.30 16th 5,139 2,974.40 34th 9,498 8,810.40 17th 5,417 3,212.70 35th 9,745 9,370.30 18th 5,688 3,456.70 36th 10.000 10,000.00 82 THE THREE SYSTEMS The same general principles apply to this form of policy as to all others issued under the Massachusetts law. Example 4.— Amount op Policy, $10,000; Age op the In- sured, 30; Kind op Policy, 10- Year Endowment requiring the Payment op ten Annual Premiums op $1,056.60, Each. Age at issuey 30; amount of policy, 10,000; age at maturity, 40. Year. Paid up Insurance. Cash surr. value. Year. Paid up Insurance. Cash surr. value. 1st 2d 3d 4th 5th $0,000.00 2,195.80 3,270.00 4,315.60 5,332.70 $0,000.00 1,621.50 2,505.20 3,480.60 4.400.02 6th 7th 8th 9th 10th $6,321.20 7,281.90 8,215.00 9,120.80 10,000.00 $5,416.10 6,481.20 7,598.20 8,770.00 10,000.00 Example 4 is to illustrate the Non-Forfeiture law of Massa- chusetts with reference to a 10-year Endowment policy. The above paid up and cash surrender values are on the basis that the cash dividends are all used during the ten years in payment of premiums. If the dividends were left with the company to be compounded at the average rate of interest realized by the com- pany, these values would be much larger. The law is self-acting. Two annual premiums paid, in cash, and no more attention paid to the policy by the insured, he would henceforth be insured for $2,195.30 until the end of the endowment period, when, if then living, he would receive this amount in cash. If death occurred prior to the expiration of the endowment period his heirs would receive the $2,195.30! The cash surrender value from year to year is what he would be entitled to upon legal surrender of the policy. Example 5.— Amount of Policy, $10,000; Age op the Per- son Insured, 40; Kind of Policy, 25- Year Endowment re- quiring Twenty-Five Annual Payments op $404 30, Each. On the back of a policy of this kind, for the amount named, and issued on a life at age 40, one of the Massachusetts com- panies places the following certificate: <( Policy No. " The company of , Massachusetts, hereby agrees to give, in accordance with the provisions of the law of 1880, Pub. Stats. Ch. 119, Sees. 159-166, to the within named on any anniversary of this policy after the end of two full years from the OF LIFE meuRAirCE. date thereof the cash euirender, or paid up values herein below 8tated,^aii7 ipdehtedness^to the company on account of this policy beiog first deducted therefrom- Cash. Piiid up. ( Annual Premiums «3T9.10 After 2 J hiive been paid ( wholly in cash. «785.10 636.60 " 3 1.281 .00 904.20 .. ^ 1,769.20 1,181.U '■ 5 2,346.30 1,469,40 3,713.90 1,787.50 7 3.170.90 2.076.00 8 3,617,10 3.8B5.50 9 4,052.90 2,726,80 '.'. ^^ !! 4,478,80 3.070.60 4,395.50 3.437.00 " la 5,302.10 3,7a8.50 " 18 5,701,70 4,184.70 " 14 6,093.40 4.987.30 '" 15 6,475.30 5,007.50 ■' 18 6,»i0.80 5,447.30 '■ 17 7,319,80 5,908,60 '■ 18 7,582,80 6,398.70 " Ifl 7,939.90 0,905.60 " ao " 8,293,50 7.446.70 ■' 31 8,640.20 8,031 .60 8^984.80 8,684.80 .. 23 .. 9,825.30 9,291.90 9,663.60 10,000.00 " 35 10,000.00 84 TH£ THREE SYSTEMS CHAPTER VIII. Class B.— Non-Forpbiturk Law of Maine. — Example.— Non- forfeiture Law of Michigan.— Examples of Policies Is- sued BT Different Companies in Class B. B. CLASS. Into this class are grouped all Life Insurance Companies doing^ business on the Level Premium plan, that are operating under the Non-forfeiture laws of their respective States— except Massachu- setts — and also those companies, their States having no Non- forfeiture laws, that have adopted, voluntarily. Non-forfeiting forms of policies by which the reserves of their policy-holders are either partially or wholly protected after two or three annual premiums have been paid. The Non-forfeiture Law of Maine.— Only one company is doing business under this law, and, in several respects, the company is issuing more liberal forms of policies than the laiA requires. The law is as follows : ** Section I. — ^Every policy of life Insurance issued on and after the first day of April, in*the year of our Lord one thousand eight hundred and seventy-seyen, by any company chartered by the authority of this State, which may be f orieited for non-pay- ment of premiums, including all notes given for premiums or in- terest thereon after it shaU have been in force three full years, and which shall not contain provision for a surrender value at least equivalent to the value arising under the terms of this Act, shall, nevertheless, be continued in force to an extent and for a period of time to be determined as follows, to wit: The net value of the policy, when the premium becomes due and is not paid, shall be ascertained according to the combined experience or actuaries* rate of mortality, with interest at four per centum per annum. After deducting from three-fourths of such net value any indebtedness to the Company, or notes held by the Company against the insured (which notes, if civen for premium, shall then be cancelled), what remains shall be considered as a net single premium of temporary insurance ; and the term for which it will insure shall be determined according to the age of the party at the time of the lapse of the policy, and the assumptions of mortality and interest aforesaid ; but if the policy shall be an endowment payable at a certain time, or at death if it shall pre- viously occur, then, if what remains as aforesaid shall exceed the net single premium of temporary insuranco for the balance of the endowment term for the full amount of the policy, such excess I OF LIFE INSURANCE. 85 shall be considered as a net single premium or simple endowment, payable only at the same time as the original endowment, and in case the life insured survives to such time; and the amount thus payable by the Company shall be determined according to the age of the party at the time of the lapse of the policy, and the assumptions of morality and interest aforesaid." " Sect. 2, — If the death of the life insured occur within the term of temporary insurance covered by the value of the policy as determined in the previous section, and if no condition of the insurance other than the payment of premium has been violated by the insured, the Company shall be bound to pay the amount of the policy the same as if there had been no lapse of premium, anything in the policy to the contrary notwithstanding; provided, however, that notice of the claim, and proof of the death, shall be submitted to the Company, in the same manner as provided by the terms of the policy, within ninety days after the decease; and, provided, that the Company shall have the right to deduct from the amoimt insured in the policy the amount, compounded at seven per centum per annum, of all the premiums that had been forborne at the time of the death, including the whole of the year's premium in which the death occurs." ADDiTiONAii Benefits Given by the Company. — Instead of deducting one-fourth of said net value to obtain said net single premium, there shall be deducted the present value of the differ- ences between the future premiums named in the policy and the future net premiums on said policy ascertained according to the rates of mortality and interest aforesaid; which present value, in no event, however, shall exceed one-fourth of said net value: And the ordinary life premium, not, however, to exceed five in number at age of issue, viz., $22.70 at age 30 for each $1,000 insured, shall be deducted from the policy, if it becomes a claim, as provided in the law, instead of the larger premium named in the policy: The proof of death may be filed in all cases within one year after such death, instead of within ninety days as provided in the law: So that, if no condition of the policy other than the payment of premiums is violated, the results named in the statement on the third page hereof — reference being made to the policy — shall be secured to the beneficiary, provided all premiums paid on this policy have been fully paid in cash; but, if there remains any note or other indebtedness against this policy at the date of lapse, it will be deducted according to the provisions of the Maine Non-forfeiture law. Example illustrating the Maine Non- Forfeiture Law AND THE additional BENEFITS GIVEN BY THE COMPANY. Policy, $1,000; Age of the Party Insured, 30; Kind of Policy, 10 Year Endowment, requiring ten annual pay- ments of $104.58, EACH. If the party insured were to pay, under the above policy, three annual premiums, and then quit paying, giving no more attention 86 THE THREE SYSTEHS to the policy whatever, or to notices that might be sent him that his fourth payment would be due at a certain date, the three pre- miimis paid would, notwithstanding, carry him seven years longer y making 10 years insurance; and, if living at the end of the seven years the company would pay him $188.13 in cash! Four annual premiums paid would carry him six years longer, and give him at the end of the six years — if living — $280.34! Five annual premiums paid would carry him five years longer, and, if living at the end of the five years, he would receive $392.63 in cash ! Eight annual premiimis paid would carry him two years longer, and, if living at the end of the two years, he would re- ceive $774.68 in cash. Nine annual premiums paid would carry him one year longer, and, if then living, the company would pay him $890.12 in cash! If death were to occur, the first year after lapse, the com- pany would pay $975.71; if the second year, $949.72; if the third year, $921.91; if the fourth year year, $892.14; if the fifth year, $860.32— provided the policy had been in force at least three years before lapsing, and provided, also, that death occur within the period of extended insurance. A different age, or kind of policy, or any change whatever from the above would change all the results. The Non-Forfeiture Law of Michicran, as amended, in 1881: Sec. 17. No policy of insurance on life, issued after this act shall take effect, by any company organized under the laws of this State, shall be forfeited or become void by the non-payment of any premium thereon, after the third, any further than as fol- lows: The net value of the policy when the premium becomes due and is not paid, shall be ascertained according to the '* American expenence Table " rate of mortality with interest at four per centum per annum. A surrender charge shall be first deducted from such net value on the following basis, to wit: From policies that have paid three full years' premiums, forty (40) per cent.; from policies that have paid four full years' premiums, thirty six (36) per cent. ; from policies that have paid five full years' premiums, thirty -two (32) per cent., and so on in like manner, decreasing the discount lour (4) per centum for each full years' premium paid, until the discount is exhausted, when no surrender charge shall be made. After deducting the surrender charge from the net value, the remainder shall be considered a net single premium of whole life non-participating insurance and the amount it will insure shall be determined according to the age of the party at the time when the unpaid premium became due and the assumptions aforesaid in regard to rate of interest and table of mortality. In case of any indebtedness on any policy, such indebtedness shall be first deducted from the net value remaining, after deduct- ing the discount, and the remainder, if any, shall be used as the net single premium as aforesaid. OF LIFE INSURANCE. 87 The following table illustrates the workings of the Michigan Non -Forfeiture law as applied to an Ordinary Life Policy issued at age 40, for $10,000 insurance: Annual premiums, less the divi- dends, paid in cash. Secures to the insured. A paid-up for 3 $641.90 4 906.90 5 1,195.30 6 1,506.90 Jl 1.840.90 8 2,194.90 9 2,570.60 10 2,961 . 70 11 3.371.80 12 3,799.10 13 4,239.00 14 4,510.40 15 4,776.50 16 5,032.60 17 * 5,278.50 18 5,517.10 19 5,748.70 20 5,970.10 25 6,947.70 30 7,728.60 35 8,335.20 40 (t 8,825.80 No surrender of the policy is necessary to secure these paid- ups ; the original policy itself becomes a paid-up, in the event of lapse, without further negotiations. There is only one company, at present, doing business under The Non-Forfeiture law of Michigan. In addition to the Ordinary Life Policy, this company issues all the usual forms of policies, including Limited Payment Life, Ordinary Endowment, Limited Payment Endowment, Semi- Endowment, etc., etc. The following is an illustration of the advantages offered un- der the Ordinary Endowment Policy: Amount op policy, $10,000 ; age, 40 ; Kind op Policy, 35- Year Endowment, requiring thirty five annual payments OF $312.40 EACH. On the back of every policy, as above described, is printed in FULL FACE type, the following: **Iti8 hereby AGREED, that on the surrender of this policy, duly receipted by the insured and beneficiaries, the (here is in- serted the name of the company) will, at the end of the third or any subsequent year, pay in cash the surrender value specified in the following table: 88 THS THBSE SYSTEMS At end of 3d year, at least $ 364.90 4th " " 503.20 6th " " 649.90 6th " " 805.40 7th *' " 969.50 8th " " 1,142.50 9th " " 1,824.10 ** 10th " " 1,514.60 " 11th ** " 1.713.50 •' 12th " " 1,921.10 '« 18th *' *' 2,137.00 •« 14th " " 2,861.70 " 15th " *' 2,594.70 " 16th " ** 2,836.10 '« 17th " " 3,085.70 18th *' ** 3,344.20 19th *' " 3,610.60 20th ** *' 3,886.00 2l8t " '* 4,170.80 22d " " 4,464.40 " 28d " '* 4,767.90 " 24th " " 5,081.70 '* 25th " " 5,407.20 *' 26th *' '* 5,746.40 " 27th '* •* 6,100.60 *' 28th ** " 6,470.90 29th " '' 6,861.70 80th '' " 7.276.70 '* 31st " '' 7,721.80 *' 32d ** *' 8,205.70 '' 83d " '* 8,736.90 " 84th '* " 9,328.70 " 35th *' '* 10,000.00. n it It (t it it There is a very remarkable definiteness to the above contract. *'On the surrender of this policy, duly receipted by the Insured and beneficiaries*'— an^^tm«— not within six or twelve months, but whenever the policy is duly surrendered and receipted, the cash will be paid according to the table above. The reader will also notice, in the table the expression, **at least." The cash values named are those agreed to be paid when all dividends have been used in payment of premiimis. If divi- dends are left to accumulate, the cash surrender values are larger than the amounts named in the table. The following assumed examples will sufficiently illustrate the character of policies issued by one of the most prominent com- panies of class B: Example 1. — Amount of Policy, %iO,000; Age op the In- sured, 36 ; Kind of policy. Ordinary Life, requiring the annuaii payment of $268.60, during life. OF LIFE INSURANCE. Age 8.88 43 23 11.97 24.97 44 24 12.29 26.14 45 25 12.64 27.39 46 26 13.00 28.71 47 27 18.88 80.10 48 28 18.79 81.59 49 29 14.21 83.17 50 80 14.67 84.84 51 81 15.14 86.62 52 82 15.65 38.51 58 83 16.19 40.52 54 84 16.75 42.66 55 85 17.86 44.94 56 36 18.00 47.86 57 37 18.68 49.94 58 38 19.41 52.70 59 39 20.19 55.64 60 40 21.02 Note. — A person insuring on the above plan, at age 40, for instance, would pay on a policy of $10,000, $210.20 each year during the first ten years. If he were to die during the time, the company would pay to the beneficiary named in the policy, $10,000 in cash. If the insured, toward the close of the first ten years, should decide to renew the contract, he must notify the company to that effect, returning to its ofllcers the original policy before the expiration of the term. The company would then act upon his application, as fully stated above. OF LIFE IN8UBANCB. 93 The following table shows the results of Renewable Term Policies for $1,000, issued at different ages in the year 1872, these results being calculated for 1882, or at the expiration of the tenth policy year. These figures are not to be considered as a guaran- tee for the future, but simply an illustration of the experience of the Company under this plan of insurance. The premiums on policies on this plan, issued in the years 1868, 1869, 1870, 1871 and 1872, have not been increased for the second term of ten years. Age. Premiums paid. Total Accumulations. Two-Thirds Accumulations. P^djjup Age. 20 25 30 35 40 45 50 55 60 $110.90 126.40 146.70 173.60 210.20 261.40 331.70 426.60 556.40 $35.21 45.86 59.85 78.86 101.36 124.29 148.20 171.90 190.47 $23.47 30.57 89.90 52.57 67.57 82 86 98 80 114.60 126.98 $115.00 135.00 157.00 184.00 210.00 231.00 247 00 260.00 265.00 20 25 30 35 40 45 50 55 60 94 T^E THREE SYSTEMS CHAPTER IX. Class C. — The New York Insurance Law.— Three Examples OF Matured Endowments.— A Remarkable Life Insur- ance Law. — Example in Illustration. — Assumed Exam- ple OP A Tontine Policy. — Actual Examples of Matured Tontine Policies. O OliASS. This class embraces all companies doing business under the Level Premium System, whose policies, in the main, are not Non- Forfeitable; that is to say, their policy-holders have to do some- thing, within a specified time, if payment of premiums be discontinued after the first two or three years, to protect their •equities in the reserve and surplus accumulations on the ordinary forms of policies. It includes the great Tontine Companies, and companies generally who issue policies in which the Tontine ele- ment predominates to a greater or less extent. Investment combined with Cheap Life Insurance is a prominent Idea with the companies in this class. The dividends paid by the leading companies of this class, with rare exceptions, if any, on the same kind of policies— other things being equal—, are larger than those paid by leading •companies in the other classes, because their policies are for- feitable ; and, generally, any grade of companies in this class can pay larger dividends than can the same grade of companies in the other classes, for the same reason. Every policy-holder in- sured in this class of companies must attend to the prompt pay- -ment of Ms premium, on or before 12 o'Clock Noon, of the day when it becomes due, or he will be liable to a greater or less loss, according to the kind and amount of his policy, and the length of time it has been in force I The New York Life Insurance Law. — On the second of May, 1879, the Legislature of the State of New York passed what has been called, in some of our insurance literature, ** The non- forfeiture law of New York." The following is the law, and we have italicised such clauses as serve to make it wholly useless as a non-forfeiture act. ** Section 1. — Whenever any policj of life insurance hereafter issued by any company organized or incorporated under the laws OF LIFE INSURANCE. 05 •of this State, after being in force three full years, shall by its terms lapse or become forfeited for the non-payment of any premium, or of any note §iven for a premium, or Joan made in cash on the policy as security, or of any interest on such note or loan, unless the provisions of this act are speeifieallytoaived in the application, and notice of suck waiver vyritten in red ink on the margin of the face of th^ policy when issued^ the reserve on such policy, including dividend additions, calculated at the date of the failure to make any of the payments above described, according to the American iiixperience Table of Mortality, and with inter- •est at the rate of four and a half per cent, per annum, after de- •ductinj^ any indebtedness of the insured on account of any annual, semi-annual or quarterly preulium then due ; and any loan in cash on such policy, evidence of which is acknowledged by the insured in writing, shMl, on demand made, with surrender ■of the policy within six months after such lapse, be taken as a single premmm of life insurance at the published rates of the company at the time the policy was issued, and shall be applied, as shall have been agreea in line application and policy, either to •continue the insurance of the policy in force at its full amount, so long as such single premium will purchase temporary insur- ance U)T that amount, at the age of the insured at the time of lapse, or to purchase upon the same life, at the same age, paid-up insurance payable at the same time, and under the same condi- tions except as to payment of premiums, as the original policy. Provided, that if no such agreement be expressed in the applica- tion and policy, the said single premium maybe applied in either of the modes above specified, at the option of the owner of the policy ; notice of such option to be contained in the demand hereinbefore required to be made to prevent the forfeiture of the policy. Provided, also, that the net value of the insurance given for such single premium under this section, computed by the iStandard of mis State, shall in no case be less than two- thirds of the entire reserve after deducting the indebtedness as speci- fied ; but such insurance shall not participate in the profits of the company. " Sec 2. — If the reserve upon any endowment policy, applied according to the preceding section as a single premium of tem* porary insurance, oe more than sufficient to continue the insur- ance to the end of the endowment term named in the policy, and if the insured survive the term, the excess shall be paid in cash at the end of such term, on the conditions on which the original policy was issued. ** Sec. 8.— This act shall take effect on the first day of January, 1880." The following are examples of policies issued by one of the most prominent companies of the O. class. The results speak for themselves: Policy :No. 49,138; Amount, $2,000; Date, July 11, 1866; Age, 26 ; Kind of Policy, 19-Year Endowment requiring Nineteen Annual Payments of $93.84, each. The Company paid, July 11, 1885 $2,000.00 And dividend additions 758.90 Total paid by Company 2,758.90 96 TH£ THREE SYSTEMS The insured paid $98.84 per year for 19 years— of which $86.05 per annum was made to earn, by the Company, five per cent, compound interest, principle and interest amounting to exactly $2,759.68, a trifle more than the sum paid on maturity of endowment. The difference between $98.84 and $86.05, which is $7.79, was the annual cost of the insurance! (The above premium was paid in two equal semi-annual payments of ^46.92* each. Policy No. 99,074 ; Amount, $8,000 ; Date, June 28, 1869 ; Age, 25 ; Kind of Policy,' 15-Yeak Eudowment bequibino Fifteen Annual Payments of $198.06, each. The company paid, June 28, 1884 $8,000.00 Anddividend additions 1,030.32 Total paid by company $4,080.32 The insured paid $198.06 per year for 15 years— of which $177.90 per annum was made to earn, by the company, five per cent, compound interest, principle and interest amounting to $4,030.77, a few cents more than the sum paid on maturity of en- dowment. The difference between $198.06 and $177.90, which is $20.16, was the annual cost of the insurance! Policy No. 156,482 ; Amount, $5,000 ; Date, May 6, 1874 ; Age, 25; Kind of Policy, 10-Yeak Endowment requiring Ten Annual Payments of $540.40, each. The Company paid, May 6, 1884 $5,000.00 And dividena additions 1,066.55 Total paid by Company $6,066.55 The insured paid $540.40 per annum for 10 years, of which $459.36 per annum was made to earn, by the Company, five per cent, compound interest, principle and interest amounting to exactly $6066.66, a trifle more than the sum paid on maturity of the endowment. The difference between $540.40 and $459.86, which is $81.04, was the annual cost of the insurance! (The above premium was paid in two equal semi-annual payments of $370.30 each. A very remarkable Life Insurance Law.—In 1868 a very remarkable statute was enacted by the Legislature of Iowa, intended as a complete protection of the reserves of policy holders who insure in companies organized under it, against the possible dishonesty and mal-feasance of Life Insurance officials. The law is as follows: Sec. 1169, chap. 5, of the Laws of Iowa (code of 1873).— "As soon 86 practicable after the filing of said statement of any com- pany organized or doing business under the laws of this State, in the office of the Auditor of State, he shall proceed to ascertain the net cash value of each policy in force, upon the basis of the American Experience Table of Mortality, and four and a-half OF LIFE INSURANCE. 97 per cent^ interest, or the Actuaries* Combined Experience Table of Mortality, with interest at four per cent. * * * For the purpose of making such valuations, when not already made as aforesaid, the auditor may employ a competent actuary to do the same, who shall be paid by the company for which the service was rendered; but nothing herein shall prevent anjr company from making said valuation herein contemplated, which shall be re- ceived by the auditor upon such proof as he may determine. Upon ascertaining the net cash value of policies in force in any com{)anv organized under the laws of this State, or doing business in this otate, and which has not made the deposit required in Section 1164 of this chapter"— (refers to the requirements of the States under whose laws the foreign companies were incorpora- ted)— "the auditor shall notify saiocompany of the amount, and within thirty days after the date of such notification the officers of such company shall deposit with the auditor the amount of such ascertained valuation of all policies within this State in the securities described in section 1179 of this chapter." Only One Company is at the present lime doing business under this Reserve Deposit feature of the foregoing law. To illustrate this feature we give the following example of a policy in force: Policy, No. 1857 ; Amount, $3,000 ; Age, 18 ; Date of Policy, March 14, 1874 ; Kind of Policy, Ordinary Life requiring the payment of $26.78, seaq- annually, during LIFE. On this policy the dividends have been applied to the pureTiase of paid-up additions. Dividend, 1875, end 1st year, 19.9 per cent, of annual premium $10 .68 Paid-up audition to policy 40.52 Dividend, 1876, end 2d year, 25.5 per cent, of an- nual premium $13.71 Paid-up addition to policy 51 .82 Dividend, 1877. end 3d year, 26.3 per cent, of an- nual premium $14.12 Paid-up addition to policy 52.38 Dividend, 1878, end 4th year, 27. 9 per cent, of an- nual premium $14.98 Paid-up addition to policy 54.52 Dividend, 1879, end 5th year, 29.9 percent, of an- nual premium $16.06 Paid-up addition to policy 57.35 Dividena, 1880, end 6th year, 30.8 per cent, of an- nual premium $16.54 Paid-up addition to policy 57.90 Dividena, 1881, end 7th year, 32.8 percent, of an- nual premium $17.60 Paid-up addition to policy. 60.45 Dividena, 1882, end 8th year, 34.6 per cent, of an- nual premium 1*18.55 Paid-up addition to policy 62.55 Dividend, 1883, end 9th year, 36 per cent, of an- nual premium $19.50 Paid-up addition to policy 64.35 98 TUE THREE SYSTEMS Dividend, 1884, end 10th year, 37.9 per cent, of an- nual premium $20.85 Paid-up addition to policy 65. 70 Dividencf 1885, end 11th year, 40 per cent, of an- nual premium $21 .46 Paid-up addition to policy 68.00 Total additions in 11 years $635.47 Total premiums paid in 11 years. . . 589. 16 Excess of additions over premiums paid.. $46.81 Remark — At the end of the Uth policy year the reserve of policy and additions, according to the Actuaries' Table, and 4 % interest, the standard required by the State, amounted to $415.94! This amount, according to the preceding law, is now deposited in the office of the State Auditor, in securities prescribed by legisla- tive enactment. The following is an assumed example of a Tontine policy, with ordinary life premium rate: Amount op Policy, $10,000 ; Annual Premium, $226.30 ; Age AT Issue, 80 ; Kind op Policy, Ordinary Life ; Tontine Pe- riod, 20 Years. Annual Pre- 1 Reserve at 4 per Annual Pre- Reserve at 4 per Year. mium. cent. Actuaries.' Year. mium. cent. Actuaries. 1st $226.30 $ 93.07 nth $226.30 $1,207.70 2d 226.30 189.14 12th 226.30 1,340 62 8d 226.30 288.28 18th 226.30 1,477.91 4th 226.30 390.60 Uth 226.30 1,619.25 5th 226.30 496.29 15th 226.80 1,764.19 6th 226.30 605.40 16th 226.30 1,912.50 7th 226.30 718.04 17th 226.30 2,063.61 8th 226.30 834.53 18th 226.30 2,217.47 9th 22(5.30 954.81 19th 226.30 2,373.88 10th 226.30 1.079.13 20th 226.30 2,532.94 Let it be assumed that a person at age 80 has under considera- tion the investment in such a policy as above described, and that he is quite favorably inclined to close the contract. Be- fore doing so, however, he should be quite sure that he under- stands it. What does the insured^ under the contract, promise to do ? The contract lived up to on the part of the insured, what does the company promise to do ? The insured promises to pay to the company $226.30, every year, during his natural life, and to live up to all the other requirements of the policy contract as to occupation, residence, habits, etc., etc., and the company agrees to pay $10,000, in cash, soon after his death, to the beneficiary or beneficiaries named in the policy. It is a simple, straight, Ordi- nary Life Policy contract — with this addition : OF LIFE INSURANCE. 99 During the first twenty years the insured agrees to pay the $226.30 per year, in full. He is to receive no dividends during that period. He is not only to receive no dividends, but no divi- dends are to he placed to his credit during that time. If he die during the twenty years, the company agi'ees to pay the face value of the policy, only. If the insured live only one single day less than the entire twenty years from date of policy, having paid twenty full annual premiums, in cash, only the face value of the policy will be paid. He must not only pay twenty annual pre- miums but he must also live twenty entire years, from date of con- tract, and fulfill all the other conditions of the policy-contract, before he will be entitled to any dividends, whaUsfcer. This t'wenty years is called The Tontine Period. During the Tontine Period, all the dividends that he might have received, and used, in annual reduction of premiums, had the policy not been a Tontine, are accumulating in what is called the Tontine surplus fund, and are being compounded, annually, at the average rate of interest, from year to year, realized by th^ company on all its invested funds. These dividend accumula lions, from his men policy, as said before, are not placed to hii individual credit, on the books of the company — they may be kept in memoranda — but they are credited to the general Tontine surplus fund of his class. If the policy were an Ordinary one, not a Tontine, and the dividends were to average, say, $75.44 per annum, and were left with the company to be compounded annually at five per cent, interest, at the end of the twenty years they would amount to $2,619.20. This would be the entire amount of his dividends, from all sources, under the assumptions made. How much would the above result be increased, if the policy were a Tontine, and the insured were to persist in living and paying, and complying with all the other conditions of the con- tract, until th6 expiration of the 20-year Tontine period ? Of course no one can answer this question, not even the Tontine companies, themselves, except approximately. There are three great Tontine companies doing business in America. One of these has estimated the amount of surplus at the end of the Tontine period, on the kind and amount of policy assumed, at $3,256.70. This is $637.50 more than the estimated surplus, if the policy were a Non-Tontine ! Another estimates the Tontine sur- plus at $4,697.00 ; or, $2,077.80 more than if it were a Non- Tontine I The third company makes no estimates. The frst of the above companies, in its recent sworn testimony before the Ohio Senate Committee, stated that the Tontine surplus, at the end of the tenth year, on a $3,000 policy in that company, issued at age 31, was $269.79; that the dividends paid on the same kind of a Non-Tontine policy, same amount and age, during first ten years, compounded at six per cent., amounted to 638081/1 100 TUE THRKE SYSTEMS only 1141.42, showing u difference in favor of the Tontine policy of $128.37, or 91 per cent., end of the Jirst ten years. Tak- ing the statement thus sworn to by the New York company, as the basis of estimates for the entire Tontine period, we have the following: The estimated Non-Tontine dividends, as stated be- fore, amount to $2,619.20. Add 91 per cent, and the result is $5,002.67, the estimated Tontine surplus at the end of the Tontine period ; but this result far exceeds the estimates of any Tontine company, on this kind of a policy, showing plainly that either our assumptions of the dividends. are too high on a Non- Tontine policy in tnat company, or, that the Tonti|;ie Dividends would not average as large during the entire 20-year Tontine pe- riod as they did the first ten years of that period. Now let it be assumed that the policy holder in our assumed ex- ample has lived through the 20-year Tontine period. What are the advantages over a similar Non-Tontine policy, at the end of the first twenty years ? 1. If the policy were a Non-Tontine in the same company, — a Tontine Company— he would have to apply to the company to ascertain how much cash, or how large a paid-up po^y, would be given on surrender of the original policy. This application would have to be made before the twenty-first annual premium became due, or the policy would lapse. It must be attended to promptly. The company has, in the reserve accumulations, $2,532.94, and we have assumed that the accumulated dividends amount to $2,619.20, making, altogether, $5,152.14, in cash, to the credit of the policy in the hands of the company — it is a Non-Tontine policy, re- member! How much of this $5,152.14 would the company probably pay the insured, in cash, on the legal surrender of the policy? Probably not more than one-half of it, or thereabouts, say $2,700— possibly, $3,000. If he preferred a paid up policy to the cash, he would receive what the $3,000 at his present age would purchase at the company's loaded rate! If the policy were a Ton- tine, how much casJi, or paid-up, would the company give him upon ^^^'a? surrender of the original policy? One of the three great Tontine Companies guarantees $2,173.90, in cash, but estimates it at $5,680. Its estimated equivalent paid-up is $12,150! Another Tontine Company guarantees $2,270.05 in cash, but estimates it at $7,120. Its estimated equivalent paid-up is $16,500! The third guarantees a cash surrender value of $2, 5S2.94f hut makes 7io estimates &8 to what it can probably do better than this. It is well to remark here that the guarantee cash surrender values above, are the entire reserves as kept by the several com- panies, and the estimated cash values are these reserves augmented by the estimated surplus. It should further be remarked that when the cash surrender value is sufficient to purchase a larger OF LIFE INSURANCE. 101 paid-up policy than the original one, medical examination is re- quired for the additional insurance. (3.) The cash surrender value or equivalent paid-up, at the €nd of the Tontine period is not the only option on the part of the insured. There are several others, with reference to which the reader is referred to Chapter V of this book. If the assumed policy were a Semi- Tontine, instead of a Tontine, any time after three years from its date, it could be surrendered for a paid-up, the insured forfeiting only the accrued surplus. The following is the history of a Tontine Policy, in one of the great Tontine companies above referred to: Policy No. 44,193; Amount of Policy |10,000; Kind op Policy, Ordinary Life, Tontine Policy; the Tontine Period, 15 Years; Annual Premium, $324.70; Age, 41; Date of Policy, June 8th, 1869. During the Tontine period of fifteen pears, the insured paid fifteen annual premiums^ in cash, of $SS4*70 each, amounting to $4,870,60, At the end of the Tontine period June 8th, 1884, the insured had the privilegre of ohoosingr any one of the followingr methods of settlement. I. He could surrender the original policy to the Company, and receive, in cash, $5,530.70. After having had $10,000 insur- ance for 15 years for nothing, he could retire with $660, cash, over and above the total sum he had paid ; or, II. He could surrender the original Policy and receive a Paid- up Policy for $10,260 upon which no further payment of pre- miums would ever be required ; or, III. He could convert the surplus, $3,918.10 into an annuity for life, $243.50 per year, and apply it in annual payment of fu- ture premiums, thus continuing the original policy. 'This life annuity, of $243.50, would alone reduce the annual premium from $324.70 to $81.20, and the future annual cash dividends would very nearly, if not quite, pay the balance. This was the option accepted by the insured ; and, in 1885, the annuity together with the dividend of 1885, more than paid the annual premium, so that the company receipted for the annual premium, and paid the tonsured %17.20 in cash. At the end of the Tontine period, the options, in percentages, were as follows: 1. Cash surrender value of the Policy was 114 per cent, of the total premiums paid! 103 THE THREE SYSTEMS 2. Amount of Paid-up Policy was 211 per cent. of the total premiums paid I 8. The cash surplus was 60 per cent, of the total premiums paid ! Example of a Matured Tontine. Policy, No. 114,285; Amount, $10,000 ; Date, May 7, 1875; Kind of policy, Ordinary Life; Annual premium, $350.50; Tontine Period, 10 years. Results: The insured paid the premiums, in full, during the 10- YEAR ToNTixE PERIOD, amounting to $3,505. By the provi- sions of the policj'-contract, at the end of the ten years he was entitled to the benefit of the following options : 1. He could SURRENDER HIS POLICY AND RECEIVE FROM THE COMPANY, IN CASH, $3,036 ; OR, 2. He COULD SURRENDER HIS POLICY AND RECEIVE A PAID- UP FOR* $6,045, NON-PARTICIPATING ; OR, 3. He COULD SURRENDER HIS POLICY AND RECEIVE AN AN- nuity for life of $258.00, per ybar ; or, 4. He could surrender his accumulated surplus, $1,255, continuing his policy, and receive an ANNUITY for life of $77.00 PER YEAR TO BE USED IN PAYMENT OF FUTURE PREMIUMS. He selected the second of the above options, and reinsured on the Tontine plan. May, 1885. Our readers must not be misled in comparing the above results with those of the 15-year Tontine preceding it. There is no basis for accurate comparison of the two. Terminable Endowments ; Reserve Endowments ; A CERTAIN KIND OF LiFERaTE ENDOWMENTS ; FiVE-YKAR DIS- TRIBUTION POLICIES, ETC., ETC., ARE FORMS OF POLICY-CONTRACTS IN WHICH THE TONTINE ELEMENT PREVAILS TO A GREATER OR LESS EXTENT ; BUT TO ILLUSTRATE THEM ALL, BY EXAMPLES, WOULD REQUIRE MORE SPACE THAN A WORK OF THIS CHARACTER PERMITS. OF LIFE INSURANCE. 103 CHAPTER X. The Natural Premium System. — Its Disttnguishinq Char- acteristics.— Requisites FOR Soundness and Permanen- cy. — A Level. Premium Separated into its Elements. — A Natltial Premium Separated Into Its Elements.— The Two Compared.— Table A, Showing Reserve and Amount at Risk on a Level Premium Policy of $10,000, AGE 40, FOR 27 Years. — Remarks on the Same. — Table B. Showing Reserve and Amount at Risk on a Natural Premium Policy of $10,000, age 40, for 27 Years. — Remarks on the Same.— Table C, Showing the Net and Gross Natural Premiums for $1,000, ages, 20 to 99.— Remarks on the Same. — Uniform Percentui^i Loading Discussed. — Sheppard Homans' Plan Analyzed.— Table D. — Remarks. — Examples of Policies under the Ho- mans Plan. n. THE NATURAL. PREMIUM SYSTEM, Distinguishing Characteristics: 1. The premium is required to be paid in advance. 2. The contract betT^een the company and the in- sured is called a policy. 3. The policy always desifirnates a definite sum to be paid by the company to the beneficiary or beneficiaries najned therein, and the insur- ance is for one year, only, or a fractional part thereof— three or six months— rene-w^able from time to time at the option of the insured, -without medical examination. 4. The premium is a *' progressive premium;" that is, it is largrer each successive year than the last precedinsT one. But the increase in a well mana&red company is liable to be impeded, somew^hat, so that each of the annual pay- ments, duringr the first five or ten years, in a Mutual Company, may possibly be kept down by dividends to a level, or nearly so, with that of the third, or even the second year. 104 the three systems Requisites for Soundness and Permanency. a.— The premium must be based on safe assumptions of fiiture mortality, interest and expenses. 6.— There must be in hand from the first to the end of every policy year, the reserve provided by laTV. To illustrate, — suppose that the insured is 40 years old at the beginning of a policy year; that the policy is for $1,000, and that the premium is based on the Actuaries' Table of Mortality, and 4 per cent, interest. (See Table No. 16, col. 6). The net premium at 40 is $9.96, and it is also the required reserve. Bear in mind that this is the reserve at the beginning of the year ; but it gradually diminishes until at the end of the year it is nothing ! At the beginning of the second year he is 41, and the net premium, — which is also the legal re- serve — , is now $10.20, which is also reduced to zero at the end of the year. At the beginning of the sixth year, at age 45, the reserve is $11.74, and nothing at the end of the year. At ages 50, 55, 60, 65 and 70, the reserves are, respectively, $15.88, $20.88, $29.17, $42.89, and $62.44, at the beginning of each of the several years indicated, but no reserve is required at the terminations of these years. Generally, at the beginning of any policy year, the reserve required by law in The Natural Premium Sys- tem, is the net premium at the then age ; but, at the end of any policy year, no matter how long the policy has been in force, no reserve is required. If any remains, at the end of the year, it shows that the mortality of the company during the year has been less than that indicated by the mortality table upon which its premiums are based, and it is placed to the credit of the sur- plus fund. <;.— The premiums should be loaded sufficiently—see **loading," pa&re 26— to provide for any possible mortality, in the future, in excess of that indi- cated by the mortality table upon vrhich they are based. This surplus fund should be safely invested, and the policy contract should defi- nitely state hmc it wiU be invested. To every policy holder who has been insured a certain number of years, say ten to fifteen, such a pro- portional part of this special mortality fund as his premiums have contributed thereto, to- firether with interest earned thereon, should be available, annually thereafter, in payment of his premiums. Should death occur, or the policy lapse, or become forfeited, prior to the expira- tion of the stipulated period, it should be for- feited to the remaining members. OF LIFE INSURANCE. 105 ^.— The necessary expenses of the company should be amply provided for by coUectinsr from every policy-holder— Quarterly, semi-annually or an- nually, in advance— a uniform fixed amount for each $1,000 of insurance regrardless of agre. A uniform per centum loadingr of the net pre- mium for expenses in this system of insurance is inequitable. e.— Good mana&rement. Every life premium, under The Level Premium System, is composed of three elements, as follows. — (1) The Reserve Element ; (2) The Mortality Element ; (3) The Expense Element. Table No. 1 gives these elements of an Ordinary Life Premium, for $1,000 of insurance, at every age from 10 to 99, inclusive, according to The Actuaries' Table of Mor- tality and 4 per cent, interest. These elements are thoroughly discussed in previous pages, commencing at page 61. Every life premium under The Natural*Premium System is composed of two elements. — (1) The Mortality Element — which is also the reserve — (2). The Expense Element. Table No. 13^ gives these elements of a natural premium, for $1,000 of insurance, at every age from 10 to 99, inclusive, according to The Actuaries* Table of Mortality, and 4 per cent, interest. By comparing col. (1), Table No. IJ^, with col. (6), Table No. 16, they will be found to be the same. That is to say, in The Natural Premium System, the expressions, legal reserve, natural net premium, and mortality element,when used with refer- ence to the same gross premium, mean precisely tJie same. To illustrate. — The gross natural premium to insure $1,000 for one year, at age 80, is $10.80, reference being had to col (3), Table No. \%. This premium is composed of the following elements : 1.— Mortality Element $ 8. 10 2. — Expense Element 2 . 70 Gross Premium $10.80 The m^ortality element ($8.10), at the beginning of the year, is also the legal reserve, and the net premium to insure $1,000 for one year. The mortality element, the net premium, and the legal reserve are synonymous terms when applied to the same gross natural premium, at the beginning of the year, or fractional part thereof designed to be covered by the premium. To further illustrate the nature anS office of the legal reserve in The Natural Premium System, and in what respect it xed rate ; that is to say, the members are divided into classes accordingr to their respective agres, somethingr like the foUowinsr, for instance: All from 21 to 80, inclusive, constitute the First Class ; those firom 81 to 40, inclusive, the Second Class; those from 41 to 48, inclusive, the Third Class; those OP LIFE INSURANCE. 121 from 49 to 66, inclusive, the Fourth Class; and those frora. 66 to 66, inclusive, the Fifth Class; the classification extending no further than afire 661 Upon the death of a member the rate of assessment for esKib. $1,000 of certificate depends upon the class he is in. The rate is fixed at date of admission, and remains unchanged so long as his membership continues. In another class of societies the classification may be the same but the ratingr changes. For example, the ne^^ member may be 28, and consequently, he is in the first class at date of entry, but -when he becomes 81 he is a member of the second class; -when 41,* the third class, and so on; his rate of as- sessment beingr chanfired to a higrher one -whenever he groes from one class to another. In still another class of societies, -whenever an assessment is levied, each member is as- sessed accordinfiT to his then age, no matter -what his afire was vrhen he entered the society. If 21 years old -when an as- sessment is made, he pays accordinsr to the risk the society is carryinfif on him at that afire; if 22, the rate is a little hififher, because the risk is firreater ; if 28, the ratinfiT is still hifirher, and so on, througrh all the different afires. In some of these societies the ratinfir is a little higrher than needed for the actual current death rate, and the surplusagre groes to the grradual accumulation of a reserve fund that may be used as desigrnated in the certificate of mem- bership. This voluntary reserve fond is not firenerally available until the insured has been a member for several years— five to fifteen firenerally— and ic is called by different names, and is available at different times for various purposes, accordingr to the different ideas of the orgranizers of different societies. We have not the sparse to name all, or one-hun- dredth part of the different phases of assess- ment insurance in this country. The princi- ples, however, underlyinfir sound assessment insurance, are few, and these -we intend to make prominent. 122 the three systems Requisites for Soundness and Permanency. a.— "Nothing is more proverbially uncertain," sajrs Dr. Babbaoe, *' than the duration of human life when the maxim is applied to an individual; but there are few things less subject to fluctua- tions than the average duration of life in a multitude of individuals." Dr. Southwood Smith says: "Mortality is sub- ject to a law the operation of which is as regu- lar as that of gravitation." The concurrent testimony of all writers on the subject of vital statistics is that the law of mortality is as certain in its operations as are those of light, heat, electricity and chemical afOnity. This law is epitomized in the Actu- aries*, and the American Tables of Mortality, found in other parts of this book. By the former, out of 1,000 persons living at the beginning of a year, at age 20, seven die during the year ; at age 30, eight; at age 40, ten; at age 60, sixteen; at age 60, thirty; at age 70, sixty^five; at age 80, one hundred and forty; at age 90, tJiree hundred and twenty-four; and at age 99, one thousand/ The law of Mortality says— and every com- pany or society that disregards it does so at great peril— that $7.01 must be charged for $1,000 of insurance, for one year, on a life at age 20, besides an equitable amount for ex- penses; when that life attains the age of 30, the sum of $8. lO must be charged for the same amount of insurance for one year; at age 40, the sum of $9.96 must be charged; at^ge 60, the charge must be $16.33; at age 60, not less than $29.17; at 70, at least $62.44; at 80, it is not safe to charge less than $136.01 ; and at 90 and 99, for $1,000 of insurance for one year, the sum of $311.28 and $961.64 must be charged, respectively, and for intermediate ages, amounts proportional to the respective ages. A ma^ximum sum, therefore, considerably larger than that indicated by the law of Mor- tality—which cannot be fully utilized except with a very large membership— should be fixed to begin with for each $1,000 of insurance at OP LIFE INSURANCB. 12B- each agre, inoreasincr every year, thereafter^, oomxnensurate with the increasingr liability of the member to die; and this maximum should be named in the oertifloate of membership a& the extreme limit of assessments on any one person for any one year. The maximum sum to be assessed, as above should provide for a special reserve fund, available only to the person contributingr it after five to fifteen years' consecutive member- ship. If the certificate -were to lapse before the expiration of the period named in the certifl- cate said special reserve £U)cumulations should be equitably credited to persistent members. This would operate as a kind of cement to hold the membership togrether and to reduce heavy mortality at the older asres. 6.— The necessary expenses of a society should be provided for by the collection, from eadh member, annually in advance, or when an as- sessment is paid, or both, regrardless of asre, of a uniform fixed amount for each $1,000 of in- surance named in the certificate. A uniform per centum loadingr on an increasingr net pre- mium is inequitable. c.—Qood Managrement.. In illuMtrating assessment insurance we shall use only a few of the best forms. I. THE HARPER PLAN. Under date of Nov. 10, 1885, a conmiunication was addressed to Mr. Harper, of New York city, asking him to define in as brief a manner as would be consistent, his plan of assessment in- surance. In reply, Nov. 18th, the following communication waa received : "Mervin Tabor, Esq. ** Actuary Ins, nept, of Illinois: ** The system of Life Insurance original with and employed by the Mutual Reserve Fund liife Association, com- prises these distinct and peculiar features : "The collection by penodical installments at intervals of sixty days, of the natural premiums of the American Table of Mortality, or such a proportion thereof as may be required to dis- charge current death claims. "The collection, at the same time and in the same way, of an amount equal to one-third of the above described premiums, and the funding of the same as surplus, or reserve fund, which can 124 THE THREE BT8TEM8 be applied in only two ways, to wit : to be drawn upon in case the mortality experienced should exceed that predicted by the American Table and after fifteen years to be used for the same purpose in lieu of the allotted contributions of surviving and persistent members. "The interest earnings and Tontine profits accruing from this fund are applied each year to the pa^jrments of current death charges thereby reducing the contributions of the members and retarain^ the otherwise unavoidable increase of the natural series of premiums. Very truly, (Signed). E. B. Habper, ** PreHdenV On the back of every oertifloate of membership is the following TABT.W OF RATBS : Admission Fee. For every certificate of The admission fee is % 1,000 % 8.00 2,000 12.00 3,000 15.00 5,000 20.00 10.000 80.00 The dues for expenses are $2,00 on each $1,000 of certificate, payable annually in advance. Assessment Rate Table. The basis of the Assessment Hate for each member, according to the age taken at the nearest birth-day, on each $1,000 of certificate, is as follows : Age. i Rate. ; Age. Rate. Age. Rate. 15 to 25 $1.00 39 $1.40 53 $2.75 26 1.02 40 1.44 54 3.00 27 1.04 41 1.48 55 3.25 28 1.06 42 1.52 56 3.50 29 1.08 43 1.56 57 3.75 30 1.10 44 1.60 58 1 4.00 31 1.12 45 1.64 59 4.25 82 1.14 46 1.68 60 4.50 33 1.16 47 1.72 61 5.00 34 1.20 48 1.76 62 5.50 35 1.24 : 49 1.80 63 6.00 36 1.28 1 50 2.00 64 6.50 37 1.32 i 51 2.25 65 7.00 38 1.36 52 2.50 • • Remark. — No assessment will be made while there remains in the death fund a sum sufficient to pay the existing claims in full. OF LIFE IKSUBANCB. 125 On the back of every Certificate of Membership is printed in bold type the following Deed of Trust : DEED OF TRUST WITH THE OENTRAL TRUST COMPANY OF. NE^W^ YORK. Aerreement. This Agreement, made the ISth day of October, 1883, between the Mutual Reserve Fund Life Association, a Corporation duly organized under the Laws of the State of New York, and located in the City of New York, party of the first part, and the Central Trust Company of New York, a corporation duly chartered by said State, and located in said City of New York, as Trustee, party of the second part, WITNESSETH : That, the said party of the first part, desiring to set aside a Reserve Fund for the exclusive benefit of its mem- bers, the said party of the second part hereby agrees to receive the same and any future additions thereto, as Tnistee, upon the following conditions : First. Such rate of interest shall be payable semi-annually by said party of the second part on the current deposits, to the credit of said Reserve Fund, as shall be, from time to time, mu- tually agreed upon. Second. Said Trust Company shall, from time to 'time, upon the written order of the President of said Association, invest said fund, or any portion of it, in such United States Bonds, State, County or City securities, or on such bond and mortgage as shall be designated by the Board of Directors of said Association and approved by the President of said Trust Company. Said securi- ties shall be taken only in the name of said Association, but shall be held by said Trust Company subject to the conditions of this contract, and with Power of Attorney from said Association to collect the interest on the same. Any of such securities shall be sold by said Trust Company, upon the written order of the Presi- dent of said Association accompanied by a certified copy of the vote of the Board of Directors of said Association authorizing such sale, and the proceeds shall be deposited to the credit of the Reserve Fund Account with the said party of the second part. Third. The semi-annual interest on the current deposits and the interest on investments shall, as it matures, be transferred to the credit of the Death Fund Account of the Association in such Bank or Trust Company in New York City as shall be designated by the Board of Directors of said Association, provided, that at the time of the maturing of any such interest the Constitution of the Association does not provide otherwise for its appropriation. Fourth. Upon receipt of a certified copy of a vote of the Board of Directors of said Association, authorizing the transfer of any portion of said Reserve Fund to the Death Fund Account above mentioned, such transfer shall be made by said Trust Com- pany. But in every case the resolution of the Board of Direc- tors authorizing such transfer shall state that such transfer is au- thorized by sections 3 and 4 of Article XL of the Constitution of the Association. Fifth. If the Board of Directors of said Association shall for any reason deem it to be expedient to order a transfer of the whole or any portion of said Reserve Fund, including the in- 126 THE THRER SYSTEMS vestments, to any State Insurance Department or to any other Trust Company organized under the laws of the State of New York, such transfer shall be made by said party of the second part, provided, that no such transfer shall be made to any Trust Company until the delivery to said partv of the second part of a certified copy of the order of the Board, of Directors of said As sociation, authorizing the transfer, and a certified copv of the contract under which the designated Trust Company shall accept the transfer ; said contract to be indorsed as approved by one of the Justices of the Supreme Court of the District in which the principal ofiice of said Association shall be located. Sixth. Said party of the second part shall be allowed a rea- sonable compensation for making investments of the Reserve Fund and collecting interest on the same, and for realizing on any of the securities of said Fund, and for any authorized expenses of any litigation arising out of this contract, without fault of the party or the second part. Seventh. In case of a dissolution of the party of the first part, the entire Reserve Fund shall be divided among the then members of the Association, proportionally to the gross amount of assessments paid b^ said members respectively to said Asso- ciation, or shall be distributed in such other equitable manner as the courts shall direct. Eighth. The party of the second part is to be answerable only for its own default, malfeasance or negligence in canying out this agreement. In Witnkss Whereof, the party of the first part, and the party of the second part, as Trustee, have hereunto caused to be afilxed their respective corporate Seals, and their respective Presidents and Secretaries have hereunto set their hands this 18th day of October, 1882. MUTUAL RESERVE FUND LIFE ASSOCLATION, r -, ByE. B. 'Raupkr, President l^^^^i F. T. Braman, Secretary. CENTRAL TRUST COMPANY OF NEW YORK, r„_._ T ByH. F. Spaulding, President. l^^^'i Ch. p. Babcock, Secretary. Every applicant for insurance under the Harper plan, must sign, in the application, with the beneficiary, the following APPLICANT'S DECLARATION. It is Hereby Warranted by the applicant, that the answers and statements in this application, whether written by his own hand or not, are full, complete, and true, and it is agreed that this warranty shall form the basis and shall be a part oi the con- tract between the undersigned and The Mutual Reserve Fund Life Association, and are offered to said Association, as a con- sideration of the Contract applied for, and subject to all the limi- tations and requirements oi the Constitution and By-Laws of said Association, with the amendments made or that may hereaf- ter be made thereto, all of which are hereby made part of any Certificate that may be isssued on this Application. And the ap- plicant further agrees that if any of the statements, representa- OF LIFE INSURANCE. 137 tions, or answers made herein are not true, full, and complete, or if he or his representatives shall omit or neglect to make any payment as required by the conditions of such Certificate, or by the Constitution and By-Laws of said Association, then the Cer- tificate to be issued hereon shall be null and void, and the ofllcers of said Association may cancel said Certificate and the same shall be returned to them, and all money paid thereon shall be for- feited to said Association. It is hereby expressly agreed that the person soliciting or taking this application, also the Medical Ex- aminer shall be and is my Agent, and not that of said Association as to all answers and statements in this application, and inasmuch as only the officers at the Home Office oi the Association, in the City of New York, have authority to determine whether or not a Certificate shall issue on any Application, and as they act on the written statement and representations referred to, no statements, representations or information made or given by or to the person soliciting or taking this Application for a Certificate, or by or to any other person, or to the Association, shall be binding on the Association, or in any manner aflfect its rights, unless such state- ments, representations, or information be reduced to writir^, and presented to the officers of the Association at the Home OflSce, in this Application. That under no circumstances shall the Certifi- cate hereby applied for be in force until the actual payment to, and acceptance of, the first annual dues by the Association, and actual delivery of the Certificate to the applicant, with a receipt for the payment of the first annual dues, signed by the President, Secretary, or Treasurer of the Association, during the life time of the applicant. And it is further agreed that the Association shall not be liable under said contract if death shall be caused by the hands of justice, or in consequence of the violation of any law. The applicant may sign for the beneficiary. Dated at 188 This risk is recommended by me, and I am witness to the sig- natures. Agent. Agent's Post Office Address Signature of Applicant for membershipin this Association. Name of the beneficiarj'. The above Applicant's Declaration is a part of the appli- cation, and, therefore, becomes a part of every certificate con- tract. It should be very carefully read by the applicant befoie he signs it. The following is a correct copy of the text of the certi- ficate issued by the Mutual Reserve Fund Life Associa- tion : OEBTIFIOATE OF MEMBERSHIP. "Mutual Reserve Fund Life Association, Bryant BuTLDiNG, Corner Nassau and Liberty Streets, New York. — In consideration of the application for this certificate of mem- bership, which is hereby referred to and made a part of this con- tract, and of each of the statements made therein, which, whether written by his own hand or not, every person accepting or acquiring any interest in this contract hereby adopts as his own, admits to be material and warrants to be full and true, and to be the only statements upon which this contract is made ; and 128 THE THREE SYSTEMS in further consideration of the Admission Fee paid, and of the dues for expenses to be paid on or before the day of . . . . .... in every year during the continuance of this certificate, and of the further payment of all Mortuary Assessments, payable at the Home Office of the Association, in the City of New York, within thirty days from the first week day of the months of February, April, June, August, October and December of each and every year during the continuance of this certificate (or from such other periods as the Board of Directors may from time to time determine), and within thirty days from the day of the date that each assessment is ordered, the Mutual Reserve Fund Life Association, from and after the delivery hereof with a receipt for the payment of the first annual dues signed bv the President, Secretary, or Treasurer of the Association, does here- by receive of •. . county of State of as a member of said Association. "Within ninety days after receipt of satisfactory evidence to the association of the death of the above-named member, during the continuance of this certificate of membership, upon the following conditions, there shall be payable to of county of State of if living at the time of said death, otherwise to the legal representa- tives of said member, the sum of dollars from the death FUND of the Association, at the time of said death, or from any moneys that shall be realized to the said fund from the next assessment to be made as hereinafter set forth, and no claim shall be otherwise due or payable, except from the Reserve Fund as hereinafter provided: ** 1. If, at such date as the Board of Directors of the Association may from time to time "^x or determine for making an assessment, the Death Fund is insufficient to meet existing claims by death, an assessment shall then be made upon eveiy member whose certificate is in force at the date of the last death assessed for, and said assessment shall be made at such rates, ac- cording to the a^e of each member, as may be established by the said Board of Directors, and the net amount received from such assessment (less twenty-five per cent, to be set apart for the Re- serve Fund) as provided in the Constitution and By-laws of said Association, shall go into the Death Fund. " n. The net earnings of the Association, together with twenty -five per cent, of said net receipts from each assessment, shall constitute a '* Reserve Fund," which shall be deposited with a Trust Company, or companies, or departments constituted by governmental or legal authority, and upon the order of the Board of Directors of the Association shall be securely invested in United States Bonds, mortgages, or other interest bearing se- curities, for the exclusive behefit of the members of the Associa- tion, and the interest on the same, as it accrues, shall be placed to the credit of the '* Death Fund," to be used in providinff for the current death claims. The Reserve Fund above $100,000, and in excess of sums represented by outstanding bonds, may be applied to the pavment of claims in excess of the American Ex- perience Table of Mortality, and when any claim by death is due, after a Mortuary Assessment upon each member of the^ Associa- tion has been made, according to the rules of the association, to making up any deficiency that may then exist in the Death Fund. *• m. After the expiration of each period of -^ye years, during the continuance of this Certificate of Membership, a bond shall be issued for an equitable proportion of the Reserve Fund, and OF LIFB mSURANCU. 139 the principal of said bond shall be available ten years from its date towards paying future dues and assessments under this cer- tificate ; and, should membership hereunder cease from any cause, said bond shall at once become null and void, and any portion of said principal not thus used, shall be applied to in- crease the bonds issued at the next quinquennial apportionment to other members of the association holding certificates issued dur- ing the same year as this certificate, and at each apportionment the rate of assessments may be changed to correspond with the actual mortality experience of the association. **rV. No agent of the association has authority to make, alter or discharge contracts, waive forfeitures, extena credit, or grant permits, and no alteration of the terms of this contract shall be valid, and no forfeiture thereunder shall be waived, un- less such alteration or waiver shall be in writing, and signed by the president and one other officer of the association. ** V. This contract is not binding until the written applica- tion therefor shall have been received, accepted, and this certifi- cate issued by the association, and delivered to said member, in person, during his life, nor until the first payments due there under shall have been fully received in cash bvthe association, or by its agent furnished with a receipt therefor as herein pro- iivided, and shall be subject to all the provisions and conditions 'contained in the Constitution and By-laws of this association, with th§ amendments made and that may hereafter be made thereto. " VI. An assessment notice or other notice addressed to a member, or other person designated by him, at his post office ad- dress as it appears upon the books of the association, shall be deemed a sufficient notice, and affidavit of, or proof of address- ing and mailing the same according to the usual course of busi- ness of said association, shall be taken and admitted as evidence, and shall be, constitute, and be deemed and held to be conclu- sive proof of due notice to said member and every person accept- ing or acquiring any interest hereunder. •* VII. This association will not take notice of any assign- ment of this certificate until a duplicate or a certified copy thereof shall be delivered to the association at its Home Office, and approved by its secretary or assistant secretary, and under no circumstances will the association assume any responsibility for the validity of such assignment. An insurable interest must be shown by all claimants, at time of claim hereunder; and claims by any creaitor as beneficiary, or assignee, shall not exceed the amount of the actual bona fide indebtedness of the member to him, together with any pa3rments made to the association under tnis certificate by such creditor, with interest at six per cent., and this certificate as to all amounts in excess thereof shall be void. " Vni. The proofs of the death by which this contract ma- tures shall include full and true answers, under oath, to all ques- tions asked by the association, relating to the life, health and death of the above named member. ** IX. Death of the member by his own hand, whether voluntary or involuntary, sane or insane at the time, is not a risk assumed by the association in this contract, but in every such case there shall be payable, subject to all the conditions of this contract, a sum equal to the amount of the assessments paid by said member, with six per cent, interest ; but the Boara of Di- 130 THE TUKEE SYSTEMS rectors or the Executive Committee of the Association at its option may, in writing, waive this condition. *' X. The entire contrA^t contained in this certificate and said application, taken together, shall be governed by, subject to. and constnied only according to the Constitution, By-Laws, and Regulations of said Association, and the laws of the State of New York, the place of this contract being expressly agreed to be the Home Onice of said association in the city of New York; and said Association shall not be liable, nor shall any suit or pro- ceeding be brought, after the lapse of one year from the date of the death of said member. " XL This certificate is also issued and accepted subject to the express condition that if any of the payments above stipu- lated snail not be paid on or before the day of the date as above provided, at the Home Office of the Association in the City of New York, or to a collector of the association furnished with a receipt signed by its president, secretary or treasurer ; or if said member shall, for the aggregate period of forty-eight hours re- side, or remain, in any city, town or district after yellow fever shall have been declared epidemic by the public authorities of said city, town or district, and before such epidemic shall have been in like manner declared no longer existing, and death shall ensue from yellow fever ; or if the member during the continu- ance of this certificate shall engage in blasting, mining, subma- rine or seronautic operations, or the production of highly inflam- mable or explosive substances ; or upon a railroad as brakeman or bairgageman, or as conductor of a freight train ; or in working or managing a steam engine in any capacity ; or shall engage in service upon a sailing vessel, or shall enter any militarj^ or naval service whatsoever (the militia when not in actual service excepted), without the consent of this association therefor, in either of the foregoing cases, piven in writing by the president or secretary thereof, and death shall ensue by or through vio- lence, accident or injuries received while engaged in such em- ployment or operations, or any of them, or if death shall be caused by or from the effects of engaging in any duel or in violation of any law, or at the hands of justice ; or if any statements made in the application for this certificate are in any respect untrue: then, and in each and every such case, the consideration of this contract shall be deemed to have failed and this certificate shall be null and void, and all payments made thereon shall be for- feited to the association. *' In Witness Whereof, the said Mutual Reserve P\md Life Association has caused its corporate seal to be hereunto afi^ed, and these presents to be signed by its president, or vice-president, and secretary, at the City of New York, this day of , one thousand eight hundred and eighty President Secretary.** Articles (L) (H.) and (HI. ), of the above certificate of merribership are Tital to the success and permanency of the association. The last clause of (IH.) is 'oery important, **and at each apportionment the rate of assessments may be changed, to correspond with the Ac- tual Mortality Experience of the Association . " This Society was incorporated Feby. 9th, 1881 ; re incorpo- rated Dec, 26th, 1883, under laws of the State of New York, and OF LIFE INSUKANCE. 181 it has $100,000 invested in United States Bonds, in trust for its members, and deposited with the Insurance Department of Hhe State of New York. Under date of July 1st, 1885, the Association claims that its neio business approximates five and one-half million dollars per month/ The Society claims as its "Pillars of Strength," Re- serve Fund; Qraded Bates; Selected Bisks; Tontine System; An Open Ledger, and A Trust Oompany, as Trustee to protect the Beserve Fundi TABLE Showing Actual Assessments for annual dues, death losses and reserve fund, on a certificate of $1,000, each year, from 1881 to 1885, inclusive, issued at the ages named. Year, Age 30. Age 33. Age 35. Age 43' Age 49. 1881 1882 1883 1884 1885 14.20 5.30 8.60 8.60 10.25 $4.32 5.48 8.96 8.96 10.70 $4.48 5.72 9 44 9.44 11.40 $5.12 6.68 11.36 11.36 13.70 $5.60 7.40 12.80 12.80 15.50 Totals for 5 years. . . 36.95 38.42 40.48 48.22 54.10 Average per year. . . 7.39 7.68 8.10 9.64 10.82 The above does not include membership and medical exami- nation fees, which* are required to be paid the first year only. The table shows the first five years experience of the Mutual Reserve Fund Life Association, and, according to (III) of •certificate contract, every holder of a certificate is entitled to a Bond for an equitable proportion of the Reserve Fund that has been accumulating during the five years, the principle of which will be available ten years from its date towards paying future dues and assessments. We regret not being able to inform our readers the amount of bond for each one-thousand dollars of certificate issued in 1881 at the above ages. Note.— Since the above was in type, we have received an •explanatory letter from the President, from which we give the the following extract : ** The amount of the bond was not given for the reason that it has not been determined as yet. We find that the dividend will be within a friaction of 40 per cent, upon the mortuanr pre- miums paid by our members for the first five years. * * * Up to the fourth year gave us a profit within a fraction of 33J^ j)er cent." 182 THE THREE 8T8TEMB. CHAPTER XII. The Fouse Plan as operated by the Fidelity Mutual Life Association.— Special Features.— Full Text of Policy. —By-laws. — Table F., giving Maximum Assessments.— Membership Fees.— Annual Dues. — Medical Examina- tion Fee — Assumed Policy op $1,000, age 89. — Table G., Showing Probable Cost, etc. — The Process op Levying Assessments Explained. n. THE POUSB PLAN. This plan of insurance was originated in 1878, by L. 6. Fouse, Esq., of Pliiladelphia, Pa., and is at present adopted by only one company. The Fidelity Mutual Life Assooiation of Philadelphia. Special Features: Expenses of management are limited by policy contract to $5.00 per annum, on each $1,000 of insur- ance, the first "^ve years, and $2.50, annually, thereafter. Assess- ments are made only three times a year — January, May and September — and paid to local trustees, and by them to a general trustee, who pays all death claims. The assessments provide for a Death Fund and a Oontinffent Surplus Fund, each defi- nitely stated in every assessment, and the two funds are kept separate by the General Trustee. The By-laws fix a yearly maximum for every age beyond which assessments cannot be made. After five years, if desired, a paid-up policy will be is- sued, maturing at the end of life expectancy; or, at death, if prior, for such an amount as the Oontinffent Surplus *Fund accredited to the original policy, will purchase on not to exceed a six per cent, basis. At the end of expectancy — reckoning from age of entry — the insured can withdraw, and, upon surrender of the original policy receive, in cash, the full amount of all the mortuary assessments he shall have paid during his membership. Policies are issued in amounts of from $1,000 to $10,000, on a single healthy life. Death claims have been paid in full — full face value of policy— from the beginning. The company was incor- porated in 1878. Each member pays according to his probability of dying and living at the time an assessment is made. OF LIFE IN8URAKCB. 138 FQLiL TEXT OF THE POLIOY. Know all men by these presents: That of county of State of... has by application, dated 18 , become a member of The Fidelity Mutual Life Association, and by virtue of the agreements and statements contained in said application, is en- titled to the benefits of an insurance. Now therefore, this policy of insurance witnesseth: That Tvhereas the said has agreed to pay, or cause to be paid annually, the sum of dollars, for the first five years, and thereafter dollars, on or before the day of in every year during lifetime, together with proportion of Mortality and Contingent Assessments, as agreed and provided in application. And whereas the first payment of such an- nual dues, having first been received by the treasurer or an ac- credited agent of the association, the said Fidelity Mutual Life Association or its members by their respective agree- ments, do hereby insure the life of aforesaid, in the amount of dollars, from the day of 18 ; and the amount so insured shall become due and payable within sixty days from the date of the periodical Mortality Assessment, first ensuing the receipt of satisfactory proof of death of the said , and said amount shall be payable to and for the sole and separate use and benefit of Provided always, that due notice and satisfactory proof of the death of the insured, and of the just claim of the assured, or any other person as executor, administrator, guardian or assign, be given to the association. And provided especially, that this policy is issued, and it is accepted by the applicant and the assured, upon the express terms, conditions and specifications set forth in the By-laws of the Association and the application of the insured, and they together shall constitute a part of this contract in the same manner and to the same extent as if they were printed in the body of this policy, and in the event of a breach of warranty or a failure to pay either dues or assessments the day on which they shall become due, then, in either case this Certificate of Membership and Policy of insurance shall be ipso facto null and void, and of no effect whatever. Provided further, That if the insured die by his own hand, whether sane or insane, in that event, the association shall only pay a sum of money equal to the dues and assessments, with interest, paid hereon in full settlement and payment of this Oertifloate of Membership and Policy of Insurance. It is also agreed. That the yearly dues are due and paya- ble at the Home Office of the Association, and that mem- 134 THE THREE SYSTEMS bers shall promptly notify the Treasurer of the Assooiation, in writing, of a change of residence or Post Office Addbsss. This Association being incorporated under section 37 of the Act of Assembly approved May 1st, 1876, is not required by law to maintain the reserve, which Life Insurance Companies are, by Act of April 4th, 1873. entitled **An Act to establish an Insurance Department, " and its policies are conditioned upon the amount thereof being realized by assessments made to meet them as provided in its By-laws. In witness whereof, etc., etc. To every Policy, or Certificate of Membership, is attached the following BY-LA\VS : ARTICLE I. Tbe object of this Association shall be to insure its members and to secure pecuniary benefits to the widows, orphans, families, or heirs of deceased members, by assessment upon surviving members as hereinafter provided. ARTICLE II. Section 1. The officers of this Association shall consist of a President, Vice-President, Secretary. Treasurer, Actuary, an Ex- ecutive Committee of three, and not less than five nor more than NINE Directors. Sec. 2. The President, Vice-President, Secretary, Treasurer, and Actuary shall be elected annually by the Board of Directors at their first meeting after the annual election of Directors, and shall continue in office until their successors are duly elected and qualified. The Executive Committee chosen by the Directors must be of their own number including the President, and shall be elected annually at the first meeting of the Directors after the annual election. Sec. 3. The Board of Directors created under Section 1, of this Article, shall be competent to exercise all the powers vested in it hy law, and shall be elected annually by the members of the Association on the second Tuesday of January ; the election shall be held at the Home Office of the Association. Members may vote in person, by proxy, or attorney, and when not voting in person the name of the member for whom the vote is cast must be endorsed on the ballot,— each member shall be entitled to one vote. Sec. 4. The Executive Committee, whicn shall be a Commit- tee of the Directors, shall supervise the business, fix the salaries or compensation of Clerks, Trustees, Advisory Boards, and Medi- cal Examiners, and shall report to the Directors at their regular monthly meeting. Sec. 5. Stated meetings of the Directors shall be held at the office of the Association on the first Monday of each month, and special meetings may at any time be called by the President, by giving the Directors notice in writing. Sec. 6. The Association may have an Advisory Board of three members and one or more Trustees in every county where OF LIFE IN8UBANCB. 135 it has resident members. Such Advisory Boards and Trustees shall be elected annually on the third Tuesday of January by the members of the respective counties ; and before such elections can be held, or when the members fail or neglect to hold elections, the Executive Committee may appoint such Boards and Trustees. Sec. 7. Such Advisory Boards in the resjjective counties shall choose a President and Secretary from their number, and shall meet any time at the written request of the Secretary of same or the local Trustee or the President of the Association. The names of all the members in the respective counties shall be sub- mitted to the Advisory Boards in such counties through their Sec- retaries at least once every four months, prior to each assessment period The names of Physicians and Agents appointed by the Association within the jurisdiction of the respective Boards shall likewise be submitted to said Boards, and it shall be their duty to keep a surveillance over Trustees, Physicians, Agents, and members, and promi)tly report to the President at the Home Office any irregularity coming to their knowledge prejudicial to the in- terests of the Association. The said Advisory Boards shall also investigate all death losses occurring within their respective jurisdictions, and report the result of such investigations to the President of the Association. Sec. 8. The Local Trustee of the County of Philadelphia, Pa., shall in addition to the duties named in Article X, Section 1, act in the capacity of General Trustee or Depository for all the other Trustees, on terms to be named by the Executive Com- mittee. ARTICLE m. The President shall preside at all meetings, shall appoint all committees, shall be the general executive business manager of the Association, and perform such duties as usuallypertain to this office. In case of his absence or disability the Vice-President shall perform the duties of the office. ARTICLE IV. The Treasurer shall keep the books of the Association, and keep therein an accurate account of all policies or memberships issued in the name of the Association, and of receipts and dis- bursements. He shall on the first of each month make a state- ment to the Board of Directors of the business done during the preceding month. He shall receive all moneys payable to the Association, and deposit in such bank ob banks, and invest in such securities, as the Board of Directors may from time to time direct. ARTICLE V. Vacancies by death, resignation, or otherwise shall be filled by the Board of Directors. ARTICO: VI. Section 1. The Treasurer shall execute such bonds with ap- 186 THE THBEB SYSTEMS proved security as the Board of Directors may from time to time require, in a sum not less than twenty-five thousand dollars. Sec. 2. The Trustees of the respective counties shall execute such bonds as the President of the Association may from time to time require. ARTICLE VII. Section 1. Persons desiring to become members of the Asso- ciation must make application according to the form provided for that purpose, and pay a membership fee, the first year only, of $5 on $1,000 ; |8 on $2,000 ; $11 on $3,000 ; $14 on $4,000 ; $17 on $5,000 ; and one dollar extra for each additional $1,000 insurance ; and $5 annual dues, payable annually in advance, for the first five years including the first year, and thereafter $2.50 annually on each $1,000. Sec. 2. Applicants must always be examined by Physicians regularly commissioned by tne association, and pay the medical examiner's fee at the time the examination is maoe. ARTICLE VIII. Section 1. No person shall be eligible to a membership who is more than sixty years old, or whose life is endangered through chronic or hereditary diseases, or excessive drinking. Sec. 2. No policy shall be issued to males for more than ten thousand dollars, and when more than fifty-five years old, not more than six thousand dollars ; and to females not more than three thousand dollars. ARTICLE IX. Section 1 . For death claims each member shall pay accord- ing to age and amount insured, his or her pro-rata share of the mortality assessments. Sec. 2. The following table of rates per cent, on the insur- ance of each member at the respective ages and according to the years of insurance shall constitute the yearly liability or indem- nity reserve of such member, from which the amount necessary to pay his portion of the death losses, which may be graded ac- cording to the mortality of his State, at each assessment period, shall be deduced. For members under 25 years, the rates shall be the same as those for members aged 25 years. OF LIVE INS[IRAliC£. TABIiB F. Ao. ar Entkv. 2B 28 27 28 39 30 31 32 Y«r. of "p^b. Ti^b' Prob. Proh. P^ or Life. Of Life. OfLir..orLife. or Lite. Of Life, tiy- 4'yre- ,.yt,|40yt- 39 y»- jssiy 37! y. I 1.388 1.428 I.47S|l.5I9 1.671 1.597 1.648 1^ 3 1.435 1.478 1.518 1.57 1.625 l.«54 1.706 1.789 S 1.48 I.. 124 1.57 1.619 1,677 1,706 1.760 1.795 4 1.532 1.568 1.616 1.666 1.736 1.754 1.808 1.846 5 1.572 1.63 1.668 1.73 1.78 1.812 1.866 1.905 6 i.eofl 1.655 1.708 1.759 1.851 1.906 1.948 7 1.647 1.697 1.748 1.804 i:868 1.9 1.957 1.997 8 1,892 1.743 1.797 1.851 1.918 1.949 3.011 3.053 9 1.735 1.788 1.842 1.899 1.967 3. 3.068 3.106 10 1.782 1.838 1.894 1.95 2.019 3.0S1 3.117 2.101 n 1.833 1,888 1.948 3,004 3.075 3-113 2.178 8.233 13 1.888 1,911 2.004 2,064 3.135 3.171 2.240 2.285 18 1.939 1.997 2.059 3.121 3.197 3.384 3. 803 8.353 14 1.99a 2,052 2,117 3.181 3.358 3-395 2.366 8.416 15 2.047 2.108 2.175 2.243 2.819 8.a57 3.4S4 3.48 la 2.1 2.163 2.2S1 2.3 3.363 2.433 3.497 3.551 17 2.159 2.322 2.293 2.3BS 3.445 8.465 3.663 3.616 18 3.313 2.28 2.851 2.435 3.307 8.563 3.631 2,684 19 3.369 2,338 2.41 2.486 3.569 3.614 3.694 3.751 SO 3.82S 2.891 2.467 2,543 3.631 3,877 3.757 8.817 ai 3.873 8.446 2.QS8 2.608 3.689 3.784 2.83 8.879 22 2.428 2.499 2.578 3.68 2.747 3.795 2. 888 8.944 23 3.476 2.55 2.6B1 2.714 2.805 2.854 3.943 3.003 21 2.525 2.602 3.683 2.77 3.86 2.909 2.907 3.064 2S 2.573 2.652 3.732 2.821 2.913 2.962 3.054 3.13 26 2.016 2.698 3.779 2.871 3.966 3.016 3.109 8.175 27 3.669 2.751 3.835 2.93 3.014 3.065 3.16 3.239 88 2.7 2,782 2.868 2.962 3.e as trustee of the Safety Fund of the said Insurance Company y" etc. This is the identical language of the company's policy contract with each of its policy-holders; and, also, of the Trust Company's, contract, with reference to this fund; so that, when the full limit of this fund shall have reached One Million op Dollars, it will all be invested — as its present accumulations are— in United States Bonds, registered in the name of the Security Company, of Hartford, Conn., as Trustee of t?te Fund. For the still further protection of this fund, it is provided in the Trustee's contract, as follows: '^ And it is further understood and agreed that if said party of the second part shalV* — meaning the trustee — ''for any cause, fail to perform its duties as such Trustee, as hereinbefore specified, or if by reason of financial em>barrassment of the party of the second OP LIFE INSURANCE. 155 part, or other cause, it shall be deemed expedient to remove said trust from its hands, then a vew trustee may be appointed, by the mutual nomination of said Insurance Company, and the then Insurance Commissioner of the State of Connecticut, to succeed to said trust with all the duties and obligations herein imposed upon- said original Trustee, and said party of the second part shall sur- render said Fund to such successor." Only one emerfirency oan arise in which any portion of this Safety Fund can be lawfully used for any purpose whatever. The net interest, however, received therefrom must be semi-annu- ally divided, pro rata, among all the holders of certificates in force, who shall have contributed five years prior to the date of any such division their full proportion of said Fund; this interest dividend to be used toward the payment of their future dues and assessments. After the Fund proper shall amount to One Mil- lion OF Dollars, all subsequent receipts therefor must be divided in like manner as the interest. The emerfirency spoken of above is this : If, after this Safety Fund shall have amounted to Three Hundred Thousand DoLiiARS, the Hartford Life and Annuity Company shall fail by reason of insufficient memberahip; or, shall neglect, if justly and legally due, to pay the maximum indemnity provided for by the terms of any certificate issued in said Safety Fund depart- ment — this means the full face value of the policy— and such policy or certificate shall be presented for payment to the Trustee by the legal holder thereof accompanied by satisfactory evidence, fully delineated in every policy, of the comp&uy*B failure to pay, after demand upon it within the time stipulated in the policy contract for limitation of action, then it shall be the duty of said Trustee to at once convert said Safety Fund into money and divide the same— "less the reasonable charges and expenses for the management and control of said Fund"— among all the holders of certificates then in force in said department, or their legal representatives, in the proportion which the amount of each of their certificates shall bear to the amount of the whole number of such certificates in force. Thus "we have seen that the Safety Fund is made up of moneys received from policy-holders, in excess of the cost of insurance and expenses, amounting to not more than $10.00 for each $1,000 of insurance issued to them ; that these moneys are paid to the Hartford Life and Annuity CoikitANY, and by it to the Trustee, and that the Trustee invests them in registered United States bonds. We have also seen that the interest earn- ings of this Safety Fund must be divided, semi-annually, in. an equitable manner, among members whose certificates have been in force five or more years after the full payment of their Safety Fund fees, and that no portion of the Safety Fltnd, itself, can ever be used, except in the event that the company should refuse, from inability or otherwise, to pay the full face value of a certi- 156 THE THREE SYSTEMS flcate that had become a legal claim against it, after having been duly presented and payment demanded; and that in such an emergency the Trustee of the Safety Fund may then be forced to a division of the Fund among all the policy-holders whose certificates shall then be in force. By an examination of the company's certificate, and the Trustee's contract, full texts of which are given herein, it will be seen that they contain all the above provisions. They are *' nominated in the bond," The company has very kindly furnished us with the following TABIiB I Showing the cost for Assessments and Dues on each $1,000 OF Insurance in Force, January 1, 1880, at the ages GIVEN, FOR THE SiX YeARS ENDING DECEMBER 81, 1885. Total cost six Average annual Age. Assessments. Dues. years. cost. 25 $30.42 $18.00 $48.42 $ 8.07 80 34.73 18.00 52.73 8.79 85 40.56 18.00 58.56 9.76 40 45,81 18.00 63.81 10.63 45 51.38 18.00 69.88 11.55 50 64.01 18.00 82.01 13.66 55 85.81 18.00 108.31 17.22 As the payments for medical examination, membership fee, and Safety Fund Deposit are fixed tand uniform, at all ages, cost for any amount including all payments may be determined by this table for the ages given. On the first day of January, 1886, the company made its first semi-annual interest dividend to all members who were entitled to it. This dividend amounts to $4.30 on each $1,000 of certificate, and is to be used toward the payment of future assessments. On the first day of July next, and eveiy six months thereafter, an in- terest dividend will be declared to these same members and to all others whose certificates shall have been in force five or more years since the completed payment of their safety fund fees. Such is the present status of the Safety Fund system, and it indicates that these dividends will certainly constitute a very valuable aid in payment of future dues and assessments. With the dividend period now reached it appears to be but a question of time, probably not longer than five years at the company's rate of progress, for the Safety Fund to reach its full limit of one million dollars, when, not only the interest will be distributed semi-annually, but all the surplus arising from the Safety Fund fees paid by new^ members —$10.00 on each $1,000 of certificate— will be also thus distri- buted and applied in payment of assessments and dues: OF LIFE INSURANCE. 157 With a completed Safety Fund, of one million of dollars, in- vested in United States Bonds, suppose, for illustration, disaster in some form should overtake the company, and members were to leave the ranks, refusing to' pay their dues and assessments ; and suppose, also, the amount of insurance on the company's books had been reduced to one million dollars, the company all this time paying the full face value of certificates presented as death claims, which it could do without burdensome assessments: suppose further, that at this juncture, with one million of dollars in the Safety Fund, and one million of dollars insurance in force, a death claim were presented and payment demanded, and the company refused to pay it, what then? The trustee of the Safety Fund would be compelled to distribute the one million of dollars to the holders of the one million dollars of insurance, each certi- ficate holder receiving $1,000 in cash for every $1,000 of certificate. The " last man " is thus provided for. Under this system ample provision is made against excessive cost in old age, and the holder of a certificate has as absolute a guaranty as he can have under any other system that the full face value of his certificate will be paid at maturity, however long he may live and persist in membership. This is assured by the division of the entire interest from the Safety Fund, until it reaches its limit of one million dollars, and after that by the ad- ditional division of all surplus arising from the Safety fund fees paid in by new members. We think the system an admirable one, and the company operating it in every respect worthy of patronage. THE HARTFORD LIFE AND ANNUITY INSUI^- ANOE COMPANY, OF HARTFORD, CONNECTICUT. In consideration of the representations, agreements, and warranties made in the application herefor, and of the admission fee paid; and of the sum of ten dollars, on each $1,000 of the maximum indemnitjr herein provided for, to be paid to said com- pany as herein required, to create a Safety Fund as hereinafter described, and of three dollars per annum on each $1,000 for ex- pense dues, to be paid as hereinafter conditioned, and of the fur- ther payment of all assessments proportioned to the maximum indemnity herein provided for, levied against the herein named member to form a Mortuary Fund for the payment of all indem- nity matured by deaths of members, which assessments, to be levied upon all the members in the department wherein this cer- tificate is issued, whose certificates are in force at the dates of such deaths, shall be made according to the table of graduated assessment ratios given hereon, and as further determined by their respective ages and the aggregate maximum indemnity at the dates of such deaths, with due allowance for discontinuance of membership, does hereby issue this certificate of membership in its Safety Fund department to (herein called the member) of county of State of with the following agreements: 158 THE THREE SYSTEMS That ninety days irom the receipt by the president or secretary of said company of satisfactory proofs, together with full infor- mation as to the manner and cause of the death of the herein named member while this certificate is in force, all the conditions hereof having been conformed to by the member, there shall be due and payable, out of the aforesaid Mortuary Fund, and not otherwise, the maximum indemnity of dollars (less the balance uni)aid, if any, of the stipulated contribution to said Safety Fund, with fifty per cent, added, together with any balance due said company), to legal representatives upon presentation and surrender of this certificate properly receipted. All such pajrments to be made at the home office of said company in lawful money of the United States. That said company will deposit said smn of ten dollars, when received, with the trustee, named in a contract made with it (of which a copy is printed hereon), as a Safety Fund in trust for the uses and purposes expressed in said contract; and shall at the expiration of five years from July 1, 1879, if said Safety Fund shall then amount to three hundred thousand dollars, or when ever thereafter said sum shall be attained, make a semi-annual division of the net interest received therefrom by it, pro rata among all the holders of certificates in force in said department at such timeS, who shall have contributed five years prior to the date of any such division their stipulated proportion of said fund, by applying the same to the payment of their future dues and assessments; and that, whenever said fund shall amount to one million dollars, all subseouent receipts therefor shall be divided by the said company in like manner as the intesest. Said company further agrees that if at any time, after said fund shall have amounted to three hundred thousand dollars, or after five years from January 1, 1880, if that amount shall not have been attained before that date, it shall fail by reason of insufficient membership, or shall neglect if justly and legally due, to pay the maximum indemnity provided for by the terms of any certificate issued in said department, and such certificate shall be presented for payment to said trustee by the legal holder thereof, accom- panied by satisfactory evidence, as hereinafter provided, of its failure to pay, after demand upon it within the time herein stipu- lated for limitation of action, then it shall be the duty of said trustee to at once convert said Safety Fund into money and di- vide the same (less the reasonable charges and expenses for the management and control of said fund) among all the holders of certificates then in force in said department, or their legal repre- sentatives, in the proportion which the amount of each of their certificates shall bear to the amount of the whole number of such certificates in force; and that in such event it shall file with said trustee a correct list, under oath, of the names, residences and amounts of the certificates of all members entitled to participate in such division. The evidence referred to above to be either certification by said insurance company's president or secretary that a claim is justly and legally due and that payment thereof has been demanded and refused, or the duly attested copy of a final judgment obtained thereupon in any" court of competent jurisdiction, satisfaction of which has been neglected or refused for the period of sixty days from its date. And said company further agrees that so long as any certificate of membership m its Safety Fund department shall remain in force, said fund shall be in no wise chargeable or liable for any use or purpose except as «bove mentioned. OF LIFE INSURANCE. 159 And said company further agrees that the aforesaid Mortuary Fund shall be in no wise chargeable or liable for any use or pur- goses other than for the settlement of death claims, except as erein mentioned. This certificate is issued by the company and accepted by the member upon the express conditions and agreements given else- where hereon, and assented to as forming part of this contract: In Witness Whereof, the said Hartford Life and Annuity Insurance Company have, by their president and secretary, signed and delivered this contract at Hartford, Conn., this . . .day of one thousand eight hundred and eighty President Secretary On the back of every certificate of membership is the follow- ing, forming a part of the contract: This certificate is issued by the company and accepted by the member upon the following express conditions and agreements: i. Application made part of contract. — The application on the faith of which this certificate issues is hereby referred to and made part of this contract; and the member hereby agrees that the answers and statements therein contained are material and that they are full, complete and true; that he has verified them and adopts as his own, each statement, representation and answer made therein, whether written by him or not ; and that state ments made to agent not therein written shall form no part of this contract. 2. Of payments. — The member agrees to pay to said company dues of three dollars per annum on each $1,000 indemnity, for ex- penses, on the first day of the month after date of issue hereof, and at every anniversary thereafter, so long as this certificate shall remain in force ; or by monthly or other prorata install ments of the same in advance for periods of less than a year. And also agrees to pay said company, upon all certificates that shall mature by death, within thirty days from day on which no- tices bear date, all assessments determmed as within set forth ; the proceeds of which, after deducting ten cents on each assess- ment for cost of collection, shall form said Mortuary Fund. And further agrees to pay said company the sum of ten dollars on each $1,000, as above, towards said Safety Fund, in a single pay- ment, within sixty days from date hereof; but if not so paid, then by equal installments thereof, monthly, during the first year of membership, commencing sixty diys from date hereof. In default of which payments towards the Safety Fund, said com pany may for this purpose increase said assessments by amounts equal to any such due and unpaid installments ; and, while the whole or any portion of such required payment shall remain un- paid, said company may apply toward payment thereof any un- applied sum standing to the credit of this certificate. All such payments to be made direct to the home office of said company, and not to agents, who are unauthorized to receive such pajrments. 3, Conditions of Acceptance.— The member further agrees and accepts this certificate upon the express condition that if either the annual dues, assessments, or safety fund deposit, as hereinbefore required, are not paid to said company on the day due, then this certificate shall be null and void, and of no effect, 100 THE THREE SYSTEMS and no person shall be entitled to damages or the recovery of any moneys paid for protection while the certificate was m force, either from said company or the trustee of the safety fund, and that if u legal and just claim to benefit, under the terms of this certificate, shall arise before said safety fund shall have accumu- lated to three hundred thousand dollars, or before January 1, 1885, and the sum collected on the assessments made on account of such event shall be paid over, as hereinbefore stipulated; or if such claim shall arise after said fund shall have accumulated to said amount, or after January 1, 1885, and this certificate be fully settled and surrendered, or if any final division from said safety fund, as hereinbefore provided, shall be made by the trustee thereof on account of this certificate, then, in all such cases, all liability of said company and of its safety fund, on account of this (certificate, shall cease. 4. (tiring Xotitr. — A printed or written notice, directed to the address of the member, as it appears at the time on the books of the company, and deposited in the post-office at Hartford, or delivered by an agent of the company, shall be deemed a legal and suflicient notice for all purposes hereof. A transcript of the books of said company, certified by the secretary, showing such facts, shall be taken and accepted as conclusive evidence of tl e mailing of such notice, and of^the facts aforesaid, as set forth in such transcript. Notices given to the member while any pay- ment that has fallen due hereon shall be unpaid, are to be under- stood only as notices to reinstate membership and shall not be held to extend maturity of such unpaid payments nor as waiving proof that the member is alive and in good health, proof of which to the satisfaction of the company shall be tendered with all payments for reinstatement, nor shall such payments be effec- tive to reinstate membership unless they shall be received at the company's home office anterior to the member's death. .5. (^linage of ReKidence or Address. — In case of change of residence, post office address, occupation, or name of the member, or his beneficiary, the member or his beneficiary shall at once give notice thereof in writing to the secretary of the company. In case of failure to do so, the company may proceed for all pur- poses as if no such change had been made. 0. ProhibHioHH. — If the member shall be personally engaged in blasting, submarine operations, mining under ground, manu- facturing poisonous or explosive chemicals, retailing intoxicating bevcniges, as engineer or fireman on railroad locomotive, or in '*brakin£i:" or "coupling" on, and "making-up** of, railroad trains, trading or living among savage tribes or nations, or shall be engaged in military service (except in time of peace), or in naval or any marine service, without, in each of these cases, hav- ing first obtained the written consent of said company, or shall use alcoholic or narcotic stimulants so as to produce intoxication sufficient to impair his health or to produce delirium tremens or to cause his death ; or shall die by self-destruction — whether sane or insane — or while intoxicated or from effects of drunken- ness, or as the result of a duel, or in consequence of keeping or visiting unlawful or disreputable resorts or of the violation or attempted violation of the laws of any nation, State, province or municipality; or if there has been any concealment, misrepresen- tation or false statement or statement not true made in the appli- cation on which this certificate issues ; or if the conditions oi this certificate shall not be in all respects obsened and performed by the member to whom this certificates issues; thpn, and in all such cases, this certificate shall be null and void, and of no effect, and OF LIFE INSURANCE. 161 no person shall be entitled to damages, or the recovery of any moneys paid thereon. 7. Travel and Residence, — The member herein named is at liberty to travel by railroad, sea, lake, or river, by all trains, first- class steamers and sailing vessels, and to visit or reside in any portion of the world other than the residence named in the appli- cation herefor, where inhabited and civilized, and free from epi- demics, wars, or internal dissentions. 8. Limitation *of Action, — It is expressly understood and agreed that no action shall be maintained, nor recovery had, for any claim upon or by virtue of this certificate, after the lapse of one year from the death of said member; and if no suit or pro- ceedings for such recovery be commenced within one year from the date of death of said member it shall be deemed a waiver, on the part of all parties concerned, of all rights or claims under or by virtue of this Certificate, and as conclusive evidence against the validity of such claim, and this certificate shall be nuU and void, and of no effect, and no person shall be entitled to damages or the recovery of any moneys paid thereon. And it is further expressly agreed, in case any suit or proceedings shall be com- . menced for the recovery of any claim under this Certificate after the lapse of one year from the death of said member, or when the claim is otherwise illegal or fraudulent, that the person or persons so commencing suit or proceeding, on failure to obtain Judgment therefor, shall pay to said Company the sum of two Lundred dollars, as its reasonable attorney fees and damages, in addition to the taxable costs and allowances in the case. 9. Debts and Liens. — It is further agreed that this Certificate shall be charged with any and all amounts that may be owin^ from the member or beneficiary herein, or their assigns, to said Company at tne time of the payment of this Certificate, and the Company reserves a lien thereon to secure the payment of any such indebtedness, and the right to deduct and withhold the amount of any such account or indebtedness in payment thereof. But nothing herein contained shall be held to constitute a waiver of forfeiture if any of the hereinbefore stipulated payments shall not be paid when due and in the manner set forth in the condi- tions of this Certificate. And that in case the laws of any Coun- try, State, or Municipality in which the member or his beneficiary may reside shall require a tax to be paid by said Company on ac- count of any moneys collected hereon, said member agrees to pay the amount of such tax to said Company in addition to the pay- ments hereinbefore named, as part of the payments needed to hold this Certificate in force, either in connection with the pay- ments of assessments and annual dues or otherwise, as said CJom- pany may from time to time elect. 10. Assignments. — This Certificate shall not be assigned or transferred unless with the concurrent action of the member and beneficiary or beneficiaries, assignee or assignees thereunder; nor unless with the consent in writing of said Company's Secre- tary and filing with him a copy of all such assignments or trans- fers, nor unless a claim hereunder, made by an assignee, be sub- J'ect to proof of interest ; nor unless the amount recoverable lereunoer by any such assignee (except such assignee shall bear to the member the relationship of wife, child, parent, brother or sister), be limited to the value of the interest proven. 11. Powers of Agents. — Agents of the Company can not alter or waive any of the conditions of this Certificate, nor issue per- mits of any kind, and they are not authorized to make any in- 162 THE THBEB SYSTEMS dorsements hereon, nor to receive or receipt for money on behalf of this Company other than for Admission Fees, for the receipt of which alone the delivery of this Certificate is acknowledge- ment. Members entrusting money to agents for payment of Assessments, Dues, or Security Fund Deposits, can not hold the Company responsible therefor, until the procurement and deliv- ery by the agent of a receipt, signed by its President or Secre- tary, for moneys thus entrusted, evidencmg the reception of such payment at the Company's Home Office before any default in payment shall have occurred. On the back of the Certificate of membership is also the fol- lowing TRUSTEE'S OONTRAOT. This Agreement, made and entered into this Thirty-first day of December, A. D. 1879, by and between the Hartford Life and Annuity Insurance Company, a corporation organized under the laws of the State of Connecticut, and located in the City of Hartford in said State, party of the first part ; and the Security Company, a like corporation also locatea at said Hartford, party of the second part ; Witnesseth : Whereas, The party of the first part purposes to issue to per- sons contracting therefor. Certificates of membership in a special department of its business to be known as the Safety Fund De partment, and, in consideration of the sum of ten dollars to be received on each one thousand dollars of the amount of each and every such Certificate for the purpose of creating a Safety Fund, to insert therein sundry agreements with such persons in the fol- lowing words, to-wit : **That said Company will deposit said sum of ten dollars," ** when received, with the Trustee, named in a contract made" *' with it (of which a copy is printed hereon), as a Safety Fund" "in trust for the uses and purposes expressed in said contract ;" "and shall at the expiration of five years from July 1, 1879, if" " said Safety Fund shall then amount to three hundred thousand" "dollars, or whenever thereafter said sum shall be attained," "make a semi-annual division of the net interest received there-*' " from by it, pro ra to among all the holders of Certificates in" • * force in said department at such times, who shall have con-" "tributed five years prior to the date of any such division their" "stipulated proportion of said Fund, by applying the same to" "the payment of their future dues and assessments; and that," "whenever said Fund shall amount to one million dollars, all " ** subsequent receipts therefor shall be divided by the said Com-" "pany in like manner as the interest.'* **Said Company further agrees that if at any time, after" " said Fund shall have amounted to three hundred thousand ' "dollars, or after five years from January 1, 1880, if that " amount shall not have been attained before that date, it shall "fail by reason of insufficient membership, or, shall neglect if" " justly and legally due, to pay the maximum indemnity provided " "tor by the terms of any Certificate issued in said department," " and such Certificate shall be presented for payment to said** "Trustee by the legal holder thereof, accompanied by satisfac- " tory evidence, as hereinafter provided, of its failure to pay, "after demand upon it within the time herein stipulated for" "limitation of action, then it shall be the duty of said Trustee"* it t$ it t$ OF LIFE mSUBANGB. 108 t> »$ It *'to at once convert said Safety Fund into money and divide the *' same (less the reasonable charges and expenses for theman- '* agement and control of said Fund,) among all the holders of" *' Certificates then in force in said department, or their legal rep-" " resentatives, in the proportion which the amount of each of "their Certificates shall bear to the amount of the whole num- ** ber of such Certificates in force ; and that in such event it shall *'flle with said Trustee a correct list, under oath, of the names," *' residences and amounts of the Certificates of all members enti-" * ' tied to participate in such division. The evidence referred to " " above to be either certification by said Insurance Company's" *' President or Secretary that a claim is justly and legally due "and that payment, thereof has been demanded and refused, '* or the duly attested copy of a final judgment obtained there- " upon in any court of competent jurisdiction, satisfaction of ** which has been neglected or refused for the period of sixty " ** days from its date. *' And said Company further agrees that so long as any Certi- **ficate of membership in its Safety Fund Department shall "remain in force, said Fund shall be in no wise chargeable or " liable for any use or purpose except as above mentioned." Now, THBREFORE, the party of the first part, in consideration of the covenants and agreements hereinafter contained on the part of the party of the second part and in accordance with its agreement with its Certificate holders as hereinbefoie recited, does hereby appoint the party of the second part Trustee as aforesaid and covenants and agrees with it and its successors in said trust to deposit with said Trustee, as soon as received, the smn of ten dollars on each thousand dollars of the amount of each and every Certificate of membership issued by it in the aforesaid department until said Fund shall amount to one million dollars, to be bv said Trustee held in trust and accumulated as hereinafter agreed, and the income thereof, less the reasonable compensation and expen- ses of said trust, to be paid over to the party of the first part, as hereinafter provided, to be used by the party of the first part in accordance with the hereinbefore recited agreements : And when said Trustee shall pay the income, as above, to the party of the first part, or, shall make any other payments from said Fund, as required by the terms hereof, the liability of said Trustee on the amount so paid shall cease ; it being understood and a^eed that said Fund belongs to the party of the first part, subject to the expressed trusts herein provided. And the party of the second part, for itself and its successors, in consideration of such deposits and of a reasonable compensa tion for its services and the necessary expenses of managing said trust, covenants and agrees with the party of the first part and its successors and with each of the holders of the aforesaid Certifi- cates that it will receive, hold, manage and dispose of all said de- posits made with it by said Insurance Company, principal and in- come, in accordance with the uses and purposes specified in the hereinbefore recited agreements of the party of the first part with its Certificate holders ; and shall at all reasonable times exhibit to the party of the first part all the securities and investments composing said Trust Fund ; and shall render true statements of the account of said funds and the income thereof to any person entitled to request the same by reason of an interest therein ; said party of the first part hereby agreeing to keep the party of the second part correctly informed of the names, addresses, numbers and amounts of Certificates of all persons thus entitled. That, as often as the sum composing such Fund shall be in i 164 THE THREE ST8TEM8 amount sufficient to purchase one thousand dollars, par value, of United States Bonds, said Trustee shay make investments of such funds therein and register the same in its name as Trustee of the Safety Fund of the said Insurance Company, and, pro- vided no default by the party of the first part as hereinbefore recited shall occur, shall accumulate said Fund and the income thereof (less the reasonable compensation and expenses), for five years from July 1, 1879, or until such time thereafter as said Fund shall amount to three hundred thousand dollars, par value, of the bonds purchased for said Fund, when the party of the second part will pay over to the party of the first part, semi-annually thereafter, all the further income from said Fund (less the accru- ing and unpaid compenaalion and expenses), to be by the party of the first part used for the purposes mentioned in the hereinbefore recited agreements : And, unless such default shall occur, will thereafter add to the principal of said Fund the deposits thereaf- ter received from the party of the first part, exclusive of the income therefrom, until the whole Fund shall amount in such bonds, at their par value, to one million dollars : And in the event of the failure or neglect mentioned in the hereinbefore recited agreements, will convert said Fund into money and divide the same in accordance with the hereinbefore recited a^eements, as soon as can reasonably be done after the necessary information of the proper persons and their shares shall have been obtained: Said party of the first part hereby agreeing to put the party of the sec- ond part in possession of the information requirea for the making of a proper division thereof as agreed with its Certificate holders. All payments required hereby to be made to the party of the first part to cense upon the aforesaid failure or neglect of the party of the first part; and all payments required herein to be made to the Certificate holders by the party of the second part to be made at the office of said Trustee or of the successor in said trust. The necessary expenses connected with the manaj^ment of said Fund shall be limited to the ordinary commissions for purchasing or selling and transfer or transmission of the hereinbefore men- tioned bonds, together with the cost of the stationery and postage used in reply ini< to requests for information of the condition of said Fund and the actual cost of any judicial action needed to de- termine the legal status of said Fund : All other expense to be in- cluded in and covered by such reasonable charge as shall be made for the compensation oi the trusteeship, to be determined by the amount of time and labor involved in the execution thereof. It is hereby mutually understood and agreed by both parties hereto that all the hereinbefore recited agreements of the party of the first part with its Certificate holders shall constitute the uses and purposes of the trust expressed herein. And it is hereby further understood and agreed that at such time as it shall be shown that all Certificates of membership issued by the party of the first part in its Safety Fund Department, have been legally settled and surrendered to it, or properly canceled in accordance with their terms, it shall be held and considered that the uses and purposes of said trust have been fully accomplished by said In- surance Company, and the balance of said Fund, if any, shall be paid over to the party of the first part. And it is further understood and agreed that if said party of the second part shall, for any cause, fail to perform its duties as such Trustee as hereinbefore specified, or if, by reason of finan- cial embarrassment of the party of the second part, or other cause, it shall be deemed expedient to remove said trust from its hands, then a new Trustee may be appointed, by the mutual OF LIFE INSURANCE. 165 nomination of said Insurance Company, and the then Insurance ■Commissioner of the State of Connecticut, to succeed to said trust, with all the duties and obligations herein imposed upon said original Trustee, and said party of the second part shall sur- render said Fund to such successor. In witness whereof, the i)arty of the first part has aflftxed hereto the corporate seal of said Insurance Company and caused these presents to be signed by its President and Secretary. And the party of the second part has hereto affixed its coiporate seal and its President and Treasurer have hereunto set their hands. Done in duplicate at Hartford in the State of Connecticut the day and year first above written. [seal.] [seal.] HARTFORD LIFE AND ANNUITY INS. CO. By E. H. Crosby, President, and Stephen Ball, Secretary. SECURITY COMPANY, By Robert E. Day, President, and William L. Matson, Treasurer. The following table is also printed on the back of every cer- tificate of membership in this company, and it is a part of the basis of the contract: TABLE J. Of Graduated Assessment Ratios for every $1,000 of Death Loss, on each $1,000 of a total Indemnity in force of $1,000,000. Age. Rate. Age. Rate. Age. Rate. Age. Rate. 15 to 21 $0.65 33 $0.91 44 $1.20 55 $1.92 22 .67 34 .94 45 1.22 56 2.03 23 .69 35 .97 46 1.25 57 2.15 24 .71 36 1.00 47 1.30 58 2.32 25 .73 37 1.03 48 1.35 59 2.50 26 .75 38 1.06 49 1.40 60 2.68 27 .77 39 1.09 50 1.47 61 2.86 28 .79 40 1.12 51 1.54 62 8.08 29 .81 41 1.14 52 1.63 63 3.30 80 .83 42 1.16 53 1.72 64 3.65 31 .85 43 1.18 54 1.81 65 4.00 32 .88 These ratios decrease in proportion as the total indemnity in force increases above $1,000,000 in amount, and are calculated ;So as to cover the stipulated cost of collection. 166 THE THKBE STSTEKB CHAPTER XIV Synopsis op the MASHAcnrsETTS Law with Reference to AS8E8MENT INSURANCE, BY INSURANCE COMMISSIONER JOHN K. Tarbox.— His General Remarks on the Same.— His Comparison of Assessment Insurance with Old Line Insurance.— Co-operative Business, by John A. McCall, Jr., Sltkrintendent of the New York Insur- ance Department.— Catch- Penny Institutions. — Reso- lutions OF THE Executive Committee op the Mutual Benefit Life Associations of America.— The Superin- tendent's Remarks on the Same, etc., etc., etc.— Co- operative Insltiance, by Ephriam Williams, Insurance Commissioner of Connecticut.— His Remarks on the Grouping of different ages for purposes of Assessment. From the Thirtieth Annual Report of the Insur-* anoe Ooxninissioner of the Oonunonwealth of Massa- chusetts, January 1, 1886. ** Chapter 183 of the acts of 1885 is an act to regulate the busi- ness of life and health insurance on the assessment plan and to authorize the formation of corporations to transact such insur- ance on that plan. It is unique in some of its features. Its pro- visions apply to all associations, now or hereafter formed, which make assessment insurance contracts, except fraternal societies and organizations with select membership, and unincorporated bodies with a maximum limit of five hundred dollars benefit. Corporations organized under it cannot transact business until two hundred persons have subscribed for insurance and paid in one full mortuary assessment in trust f( r beneficiaries. Their contracts must be for a sum specified in the policy or contract, and when the obligation accrues the beneficiary shall have a prior lien, defeated only by proceedings in insolvency, upon all the property of the corporation for its payment, and, if payment is not made within thirty days after demand, the corporation upon notification by the commissioner shall issue no jwlicy while such notice remains in force. Policies cannot issue upon the life of any person over sixty years of age. nor for the benefit of a person who has no interest in the insured life. An assignment to a person having no interest in the insui*ed life voids the policy. Each corporation must provide for an emergency fund, distinct from its ordinary death fund, to be maintained at all times, of an amount not less than the proceeds of one death assessment on all its policy holders. This fund is to constitute a trust for the pay- ment of policy claims not otherwise provided for, to be invested OP LIFE INSURANCE. 167 in such securities bs insurance companies may by law invest their capital, and deposited with the treasurer of the commonwealth. These securities can be withdrawn from deposit only upon a req- uisition of the corporation, endorsed by the insurance commis- sioner, and for the purposes of the trust. When the corporation shall cease business the fund is to be administered under judicial authority (1), for the payment of accrued claims, if any, and (2), the payment, in order, of claims that shall accrue. Existing corporations are given six months from the passage of the act, and newly organized corporations six months from date of their incorporation, to accumulate the fund. ** All assessments must be for a specific purpose, and the pro- ceeds must be applied to the stated use. " When a corporation not purely mutual neglects without jus- tifiable cause for thirty days after proof of death to levy an assessment for payment of the claims, the members of the cor- poration shall be personally liable to the beneficiary for the amount due. "No corporation shall reinsure with another corporation unless the contract therefor shall be approved by a two-thirds vote of a meeting of the policy-holders held to consider the matter. Agents, solicitors and physicians of any such corporations, are liable to fine and imprisonment for making wilful false state- ments or representations in reference to insurance therein. The act provides for the admission of similar corporations of other States to transact business in Massachusetts. To qualify itself for such admission such foreign corporation must nle with the insurance department (1), a certified copy of its charter ; (2), a statement under oath of its business for the preceding year, and that it is paying and for the past year has paid in full the maxi- mum amount named in its policies ; (3), a certificate from the proper authority in its State that like corporations of this com- monwealth are legally entitled to do business in such State ; (4), a copy of its policy and form of application, which must show that benefits are provided for by assessments on policy holders ; (5), evidence satisfactory to the commissioner that it accumulates a safety or emergency fund equal in amount, and of the charac- ter required of our home companies. It is made the duty of the commissioner to revoke the authority of such foreign corpora- tion whenever he shall be satisfied that it does not pay its policy obligations in full. '* The act defines the duties and powers of the commissioner in respect to these corporations. He is given the same powers of visitation and examination as in the case of life insurance com- panies under chapter 119 of the Public Statutes. Whenever he 18 satisfied that a corporation has exceeded its powers, failed to comply with any provisions of law, or is conducting business fraudulently; and, whenever, after notice upon information of its default for thirty days to paj a claim due, and investigation had thereon, it shalf appear to him the liabilities of a corporation ex- ceed its resources, and that it cannot within a reasonable time, not more than three months from the date of original default, pay its accrued indebtedness in full ; he shall report the facts to the attorney-general, who shall apply to the supreme judicial court for an injunction and such other judicial proceedings as the interests of tlie corporation and of the public may require. "This legislation, though inadequate for some important ob- jects, will effect useful results in the care and prevention of sev- eral abuses and the protection of the public, at least in a degree, from imposition, and is perhaps as radical legislation as couSbe 168 THE THREE SYSTEMS secured in the present state of popular feeling and information on the subject. " I am, however, not content to pass the matter finally with- out further brief comment. Insurance has come to be a common need of our social life. Corporations engaged in it serve, in a special sense, a public want, and are not to be regarded or consti tuted or left subject alone to the laws of trade, as are ordinary business enterprises organized and conducted primarily for indi- vidual profit. The people have the right, which the State should guard, to obtain the advantages of these institutions as cheaply as they can be furnished, and that the institutions should be con- structed on the basis most conservative of the safety of the inter- ests they involve. » » » » Corporations now organized, with a membership sufficient to pay a full maxi- mum benefit from the proceeds of a single assessment, will be able to adjust their affairs to the requirements of the new statute with little inconvenience, since the old and new certificates will possess the same actual value. But corporations with certificates issued for a nominal amount, larger than an assessment will reaX- ize, encounter a difficulty in the management of their business which may be overcome, and perhaps not otherwise than by a substitution for the old certificates of new certificates, conforma- ble to law, for a specified sum as nearly equal as may be to one assessment collection. This substitution the present members should cheerfully consent to, as they will suffer no substantial injury thereby, and it seems the only mode to secure equality in assessments. I entertain no doubt, sufficient to affect official action, that the statute intends the contract shall state precisely and unconditionally the sum to which the beneficiary under it is entitled, and that any form of contract which left the amount to be paid dependent upon uncertain conditions, as the more or less proceeds of an assessment, would be judiciously held an unlawful evasion of the statute." Under the head of Beneficiary and Assessment Insur- ance Corporations, the Commissioner says : ** The department has unofficial information of several asso- ciations which organized in form of law and carried on a lawful, but essentially fraudulent business with the public, for a season, and then disappeared with unfulfilled obligations. These, and similar abuses, inflicted upon the public under shield of the law, will be measurably redressed in future, by the recent act of the legislature. * * * "The new statute is likely to compel the speedy departure of several, which will be unable to meet its qualifications and have no adequate reason for their existence, and others will ultimately yield to the competition of more potent rivals. And thus the system must abide ultimate judgment upon the fate of a few chosen representatives. The demonstration may be somewhat remote. A well mnnai^ed association ought lo sustain itself for a few years without difficulty. If it attempted to insure lives to the age only of fifty, it might rationally go on for an indefinite term on that basis. But to an association which undertakes to insure persons to the extreme limit of human life, the crisis comes when a considerable body of its members reach old age and the death- rate rapidly increases, as must be. If assessments are graded to the relative prospect of longevity of members, as the ages ad- vance, will the old man stay in and pay the greatly augmented cost of insurance ? If, as probable, not, then the plan fails as OP LIFE INSURANCE. 169 whole-life insurance. Or, if assessments are not graded, will the youth stay in and bear his disproportionate burden of a com- mon loss for the benefit of the more aged ? The assumption of this plan is that new lives will constantly come in and maintain the average age and a uniform death-rate, in which case the asso- f The Hon. Ephraih Williams. Insurance Commissioner for the State of Connecticut, in his official report to the Legislature for the year ending Dec. 31, 1884 — ^report dated April 10, 1885 — says: ''All properly conducted assessment companies fix their yearly assessments strictlv according to the respective a^es of the members and the year^ risk at those ages. All grouping of different ages for a like assessment is inequitable, and thereiore objectionable. For the younger ages in the group pay not only for themselves, but also in part for the older ages. It matters not whether the assessment be large enough to cover the risk of the eldest age in the group or only sufficient to cover the aver- age age; in either case the younger are overcharged.*' The foregoing official utterances of the Insurance Commis- sioner of Massachusetts, and of the Superintendents of Insur- ance for the States of New York and Connecticut, are worthy of careful consideration. More attention has been given to life insurance in all its different phases, and more money expended in its supervision, in these three States than in all the other States of the Union. 172 TUE TUllEE SYSTEMS CHAPTER XV. Assessment Insurance Continued. — Proceedings of Tenth Annial Convention of Mutual Benefit Life Associa- tions OF America. — List of Societies and Delegates. —Annual AddrI':ss by President B. F. Phelps.— Re- port OF Exe('i:tive Committee. — Address of E. B. Har- per, Esq., WITH Reference to Fixed Dates for Levying Assessments. — Remarks on the Same, by Dr. T. B. Camp- bell, OF Wheeling. W. Va., and A. S. Brownell, of New York City. — Reports of Vice Presidents. — Discus- sion ON Various Topics, by Leading Members of the Convention. — Address of the Hon. Julius L. Clarke. Through the politeness of some friend — we know not who — we are in receipt of a pamphlet of 119 pages, entitled: "The Prooeedinffs of the Tenth Annual Conven- tion of Mutual Benefit Life Assooiations of Amerioa, ?u'l(! in the Hty of Bmton, on tJie iSoth, 26th, S7th and £8th days of AugvHt, A. I).. ISSo. As this convention is composed of representatives from the best class of assessment societies in the United States, we have quoted largely from its proceedings, believing that thereby we are giving to our readers the best thoughts of some of the best thinkers who are actively identified with this kind of insurance in this country. Tin* connnittee on credentials reported thirty societies repre- sented by forty -seven regular delegates and members, and one " indirUluiir' membership. They are as follows : LIST OF SOCIETIES AND DBLBQATBS. Soci<*tics. Chicai^o (iiiJirantv •r> Fund Life Society. Locations. ;- Chicago, 111 -j Covenant Mutual/ r«„i^^K ,„ m S \y «♦ \ ,; .: I c Galcsburg, 111..-^ Benefit Association! S ' Farmers and Me(han-| / ( ies Mutual Aid. .j - St. Louis, Mo. . -' Association I i ' Delegates. George Sherwood. J. H. Oney, M-D. Col. E. F. Phelps. S. D. Pollock, M.D. Fletcher M. Doane. OF LIFE INSUKANCE. 178 List of Societies. — Continued. Societies. Fidelity Mutual Life Association . ... Hartford Life and Annuity Lisurance Company Home Benefit As- sociation Home Mutual Aid Association Kentucky Mutual Security Fund Com- Legislative Asso- ciates Mahoning Valley Mutual Relief As- sociation Mass. Benefit Asso- ciation Mass. Mutual Acci- dent Association. . Mutual Benefit Life Co Mutual Benefit Life Association of • America Mutual Reserve Fund Life Asso- ciation Mutual Trust Fund Life Association. . National Life Asso- ciation New England Mutu- al Aid Society Northwestern Mutu- al Benefit Associa- tion Ohio Valley Protec tive Union Scandinavian Mu- tual Aid Associa- tion Telegraph ers'Mutual Benefit Association Temperance Mutual Benefit Association Union Mutual Asso elation Union Mutual Asso elation United States Mutual Accident Associa tion Location. ( f I I 1 I Louisville, Ky. . \ \ \ Philadelphia, Pa ■! Hartford, Conn, i New York City. \ Boston, Mass. . •! ] / Youngstown, O. -I Boston, Mass . . \ Boston, Mass . . -j Hartford, Conn-J New York City. New York City. New York City, -j Columbus, Ohio \ Boston, Mass. . . ] ] Detroit, Mich. Wheeling, W.Va | Galesburg, 111. . ^ New York City. ] [ Easton, Pa ] Battle Creek, ] !• Mich "j [ Bath, N. Y ] New York City Delegates. L. G. Fouse. W. S. Campbell. Stephen Ball. Andrew T. Smith. A. S. Brownell. Wm.G.Richards, M.D. Wm. L. Wellman. P. W. Crawford. Frederick A. Lord. Col. G. F. Potter. Geo. R. McChesney. Jas. R. Seagrave. A. D, Ensign. Geo. A. Litchfield. W. G. Corthell. Geo. E. McNeil. J. H. Welch, M.D. Edward Henry Kent. Wm. L. Gardner. E. B. Harper. Alfred Taylor, Esq. W. J. Walker. B. F. Hamell, M.D. D. E. Stevens. Benj. F. Dyer. J. A. FoUett, M.D. James Kelley. C. G. Dillon. T. B. Campbell, M.D. Nels Nelson. Chas. P. Bruch. N. Dubois Chase. L. A. Tyler. Geo. E. Foote. J. H. Wattles, M.D. Henry W. Garnsey. Gen. W. B. French. Hon Geo. D. Eldridge. 174 THE THREE SYSTEMS List of Societies. — Concluded. Societies. United Workman. . . Valley Mutual Life Association Western Union Mu- tual Life and Ac- cident Society of the United States. Womens' Mutual In- surance and Acci- dent Company Localiciec. [ Grand Lodge of ■ NewYork. . . . ) Staunton, Va. . . Detroit, Mich..' i New York Cit r Auburn, Me ] Delegates. John J. Acker. C. L. Cooke. L. M. Thayer. John M.Eamping,£sq. M. F. Ricker. (In- dividual Membership.) Ck>l. B. P. Phelps, of the ** Covenant Mittual Benefit Association," Galesburg, III., was President of the conven- tion. The following are extracts from his annual address: " For the tenth time we are again assembled in the capacity of a National Convention of Assessment Life Insurance Associa- tions, for the purposes of gathering wisdom by a friendly consultation, and a free interchange of thought and experience, which has, in the past, greatly assisted us in giving strength and efficiency to this system of Life Insurance, which we are fully persuaded is destined to be the leading and popular system of the future. Permit me to congratulate you upon the marked progress in the growth and maturity of thought and plan that has been manifested at these annual gatherings, which, like imperishable monuments, mark, step by step, the path we have trodden. Scarcely more than five years before the first meeting of this convention, what we are now justly proud to term the * Arr^nrican Plan of Assessment Life Insurance,' drifted into gnce, as has been aptly and truthfully said, ' without chart or >ass. '" * ^ * " Noth withstanding the many, almost in- American Plan of Assessment Life Insurance,' drifted into existence, compa^ excusable, crudities of its inception, and the numerous disad- vantages under which it labored, and in spite of all the organized opposition that interest and prejudice — aided by unlimited wealtn — could command, Assessment Life Insurance has, in a little more than one decade, by honest and faithful work, been placed among the leading finHncial institutions of our nation, and by collecting together at a nominal cost, and distributing for the relief of our widows and orphans the princely sum of f 12^962,105, has clearly demonstrated its unquestioned ability to meet the de- mands of an ever increasing necessity, and, as we believe, but faintly foreshadows its unlimited possibilities for the future." * * * 'i This convention has in the main taken a broad and enlarged view of the subject, fully realizing that we are not building for to-day alone, or for the present generation, but has looked forv\'ard into the future of our institutions, and wisely considered what will give them permanent strength and stability, as well as present popularity and success. While the original in- tention and design of the early founders of this system of in- OP liIPE INSURANCB. ^ 176 surance was to build a few small institutions, founded on the principle of organized charity and benevolence, as practised by the fraternal societies for which they were intended as auxiliaries, this convention has been instrumental in radically changing this fundamental idea of its originators, and placing it where, by right, it belongs, on the firm foundation of correct business prin- ciples. While it is probably true that very few, if any, of the gen- tlemen who composed the first convention that assembled at Elmira, N. Y., ten years ago, realized the necessity of conducting the business of their respective associations on principles other than those of charity and benevolence, yet, the interchange of experience and thought afforded by these annual gatherings soon led many of them to see that there was something radically wrong in their system, which, if they desi.ed to become success- ful, must be immediately chaDged. Thus we find that for a number of years this was one of the most fruitful subjects of discussion, while other important changes, such as graded assess- ments, limited benefits with imlimited membership, a careful and rigid selection of risks, with other less vital features, have been so fully, earnestly and effectually considered and discussed, that what was then but a crude, imperfect experiment has been de- veloped into a system of practical life insurance, suited for and popular with the masses, and as a financial institution has taken rank second to none among those matured in this rapidly pro- gressing age." In support of the assertion that the National Convention has had a marked influence upon the progress and development of assessment insurance, giving it strength and character and se- curing for it public confidence, the president says: ''No stronger proof of the truth of this assertion is necessary than to refer to the standard unanimously adopted at the last session of this con- vention, which but one year previous was vigorously and almost bitterly opposed, if not by a majority, by such a large and re- spectable minority that its most zealous advocates deemed it un- wise to press it to a final vote." The president, after portraying the difficulties in the way of planting good seed and protecting its growth, continued as follows: '* But while we have just cause for congratulating ourselves on account of the substantial progress and growth that have been made in the past, yet we must remember that we are but just putting off our swaddling clothes, and that there still re- mains much to be accomplished by careful study, and hard per- sistent work, before we can attain the mature development of ripe manhood. While we have adopted a standard that is in ad- vance of the practical operations of many of our associations, and which is undoubtedly scientifically correct, there yet remains much to be done to bring a large mass of associations, who are now honestly endeavoring to conduct the business of assessment insurance up to that standard, and to amend and perfect the re- cently enacted statutes on that subject so as to protect ourselves and the public against the operations of those unprincipled and corrupt men who are organizing and managing unsound and fraudulent corporations, whose veiy existence is unjustifiable and dangerous to society. In the lurtherance of this cause it becomes our duty to see that laws are enacted and enforced which 176 , THE THREE SYSTEMS will enable the gcEieral public, who are seeking life insurance, to distinguish the substantial and real, from the captivating frauds, which by their plausible and seductive statements, their active and prepossessing agents, who present figures and theories of im- posing magnitude, have been able to secure temporary success. "^ The Bxeoutive Ck>niixiittee of the Convention was com- posed of L. O. ForsE, Esq., of the '* Fidelity Mutual Life As- sociation," Philadelphia, Pa.; E. B. Harper, Esq., of the ** Mi'TVAL Rkseiivk Fi'ND LiFE ASSOCIATION, New YorkCity; G. A. Litchfield, Esq., of the Massachusetts Benefit Associa- tion, Boston, Mass.; and 1). E. Stevens, Esq., of the National Life Association, of Columbus, Ohio. We would like to irive our readers the report of this committee, to the Convention, in full, but this is impracticable. They must be content with the following extracts: **The active membership of the Convention has not materi- ally increased since the last session, which is lar^ly due to the restrictive by-laws then adopted. Your Committee has been obliged to refuse a number of applications for membership, be- cause the companies applying could not meet the requirements of the standard and of the by laws. While it is unpleasant to de- prive any association of the advantages to be derived from a membership in the convention, we still must recognize that the adoption of the by-laws, setting forth a conservative . standard, was the greatest and most advanced step ever taken in assess- ment insurance. Our work is to a great extent to conform assess- ment insurance to the laws of mortality. In this we are making good progress. Associations that were members of the Conven- tion before the adoption of the standard, and which had plans in conflict therewith, have generally taken steps to conform to it. Some of them are, unfortunately, hampered by their state laws, those laws being in conflict with our standard, and with sound principles. For such we should have considerations, and it should be our part to aid them in every way in our power in re- moving shackles. "During the past year a number of associations outside of the convention have taken steps to change their plans and place themselves on a par with the standard of the convention, or on a permanent basis. The Chairman of this Committee has given his services, experience and suirgestions freely to such associations, and it is with great satisfaction that we can look forward and see in the near future all business organizations, engaged in insuring lives on the assessment plan, on a solid, permanent basis. Be fore that time can be reached, we shall, of course, see the dis- solution of many of the weaker companies, and especially of those that organized on a false basis, such as charging all mem- bers the same rate, regardless of age, or that of making no pro- vision for meeting the increasing liability from advancing age, thus imposing an unjust burden upon new members, or that of failing to make proper provisions for expenses. * * * Par- ticularly with a view to this matter, your committee submitted, for discussion the following question: ' Would it not he for the interest of Assessment Insurance for this contention to adopt a standard of rates conforming to the requirements of the laws of mortality, and publish the same in all of its reports ' f If this con- vention could agree upon a standard of rates, capable of mathe- OP LIFE INSURANCE. 177 matical demonstration, it would serve as a guide to associations organizing in the future, to those that contemplate changing their plans, and to the legislatures of our states, in future legislation. '* While we may all have pet ideas as to the best method of reaching the same result, we have a common ground-work or foundation in the mortality tables. Let us adopt a standard of rates that will conform to these, not only the first year of insur- ance, but for all time, so as to observe strict equity between the insured, and then let us keep it before the public through all our publications. This will have a tendency to check the produc- tion, by the futile brains that are constantly endeavoring to de- velop some new plan that shall accomplish impossibilities, of those mathematical monstrosities and ill-digested schemes which have done so much in the past in retarding the progress of assess- ment insurance. Some evidence as to the weight which would attach to such a standard emanating from this body, may be had in the degree of attention which was given to the standard recommended by this committee to the Cincinnati Convention, and there adopted, in proof of which we may cite the compli- mentary references thereto contained in the official reports of the Insurance Superintendents of New York and Ohio . The position occupied by Mr. McCall, and the care and earnestness that have characterized the discharge of his duties, render his commenda- tion doubly valuable, and, we are bound to say, should give added force to his criticisms. For while it was not the intention, and we think was not understood to be the intention of this commit- tee, to give any endorsement to schemes of endownment insur- ance in connection with the assessment plan, the exception which Mr. McCall takes to even a quasi endorsement thereof shows in a marked way how thoughtful men regard the union of two systems that have nothing in common, and whose connec- tion, at the best, must be a forced and unnatural one . At the same time, the soundness of the recommendation made on this point is unquestionable, for if an endownment is to be promised (and we insist that the ' if ' shall be the emphatic term) it must be pro- vided in this, the only legitimate way." (See extract from Superintendent McCalFs report on page 170.) "Attached hereto and marked 'Exhibit A," we give, some- what in detail, the ordinarily compiled statistics relating to the business of Assessment Insurance in this country during the past year. The principal items in this exhibit are as follows : Number of companies 430 New members admitted during year 313,321 Number of members close of year 1,655,975 Amount of insurance in force, close of year *$3,785, 163,363 Assessment collections during year 23,856,943 Death-losses paid during year 22,932,056 Expenses of doing business for the year 3,557,052 Assets at close of year 8,238,635 Death-claims paid since organization 122,962,105 Number of deaths during the year 9,563 Number of death-claims paid since organization. . 52,597 **The exhibit is a satisfactory and even a flattering one and might be made the basis for interesting comparisons, but far more important than this consideration is that of the vast re- *The committee undoubtedly mean this as the face value of certificates. Some societies pay face values, but more do not. Author. 178 THE THREE ST8TEH8 sponsibilities that are placed upon our companies by this far- reaching business. This thought also calls up a feeling of regret, that, in not a few instances, this sense of responsibuity is not sufficiently keen to impress upon managers the necessity of shap- ing their plans to meet those fundamental principles that must underlie every system of life insurance, and can no more be ignored with safety in assessment than in level-premium life in- surance. The failure to appreciate this has led to disastrous re- sults in the past ; it can but lead to the same in the future. A few years at the inception of a societv, when new risks are easily obtained and when a comparatively recent medical selec- tion has its most marked effects, are not sufficient to test a plan or to warrant loud claims of success. " The future is even more the province of the Life Insurance Company than the present, save that the future is the out- growth of the action of to-day. Our standard of one year ago was none too severe; its necessity and strength we shall be in a better position to appreciate a year from now than to-day, but of this we may rest assured, the peril of assessment insurance is in the cowardice of those in its ranks who have not the courage of their convictions, but temporize to-day with the dangers that threaten them to-morrow, in hope that, when that to-morrow comes, some, before unheard-of, revulsion of the laws of mort- ality will bring them immunity from the destruction they have so assiduously courted. It is this which gives a serious aspect to the increasing volume of business which every year shows to be setting towards assessment companies, and it is against this that this convention should set its face and its influence, if it is to do the best that lies in its power, and be, in the broadest sense of the word, the power for good which alone makes it worth our while to meet in these annual gatherings and to take counsel with one another of the experience we have gained in our work." Address of Mr. B. B. Harper. Subject : Should not OUR Associations adopt fixed dates for the levying of As- sessments? Among the many good things said by Mr. Harper in this ad dress we notice the following: *' The one million of members enrolled upon the books of our various assessment organizations represent all classes of citizens, the rich and the poor, the ignorant and the intelligent; those who fluently speak, read and write the English lan^a^e, and those who can scarcely understand the same; many reside m homes of afflu- ence, with established business headquarters; many who live in the flats and tenement houses of our cities, and in small suburban homes in the country; many who have no established business headquarters, but who earn their living by the actual sweat of their brows, and whose varied pursuits necessitate the frequent changing of their post-office addresses. It is obviously unjust that the insurance held by a member should be lost to him with- out any fault of his, or without his knowledge; but so it may hap- pen, even while the member may be upon his death bed, and in his dying hours, when he supposes that he has to the fullest extent in his power provided for those dear and near to him. This calamity may befall a member if there are not fixed dates for the levying of dssessments.^' Mr. Harper gives other and very forcible reasons why fixed OF LIFE IN8UKANCE. 179 dates for assessments are an absolute necessity, and closes this part of the argument with the following: *' Therefore, I advocate, and I urge it upon all the assessment organizations of our country, that they should adopt fixed periods for levying their mortuary calls. From my own experi- ence I would advise that said calls should be fixed and established either monthly, bi-monthly or quarterly, so that the members may know, years in advance, when and where they are expected to contribute their share towards the payment of the current death losses." Mr. Harper continued as follows: *'l submit, therefore, Mr. Chairman and gentlemen of the convention, that this matter practically resolves itself into the question whether we, who are engaged in the interest of the widow and orphan in a cause which numbers 1,600,000 members, can hope and expect that the cause can go on winning converts and retaining their confidence when any such misadventures as I have illustrated can happen without any fault of the member; and I maintain that the managers of our assessment organiza- tions will themselves have to contend with charges other than what I have stated— charges that when they discover that a member is deceased, they sunply fail to send his usual notice. I have heard those charges repeated and repeated time and time again. It is one of those things which cannot be disproved, and the only way the management, in my opinion, can show to the world that they mean to do what is right by their members, is for them to establish periods when the mortuary calls shall be made." T. B. Campbell, M. D., of Wheeling, W. Va., would prefer a table of rates that might require six to eight assessments a year, thus avoiding extremes. Mr. A. S, Brownell, of New York City, was inclined to fix dates for making assessments. If asked to express his preference he would state bi-monthly assessments, in amount varying ac- cording to the necessity of the period, or of stated amounts suf- ficient to cover probable losses, with periodical rebates for un- used amounts, preference being given to the latter. He then offered the following resolution, which was seconded by L. G. Fouse, of Pennsylvania: ** Resolved. — That it is the opinion of this convention that it is for the interest of the Mutual Assessment Associations to adopt fixed times for the levying or payment of assessments. " After a somewhat lengthy discussion by Messrs. Walker, Taylor, Kamping and French, of New York; Cooke, of Virginia; Fouse, of Pennsylvania; McChesney, of New York; Seagrave and Stevens, of Ohio, and Phelps, of Illinois, the resolution was passed unanimously. Section 2, Article IX., of the by-laws of the convention requires its vice-presidents to report, annually, the progress of assessment insurance in their respective states. These re^o^^s. 180 THE THREE SYSTEMS are very interesting and replete with instruction as to the status of assessment insurance in their several localities. We note the following: Prom New York- A. S. Brownell, V. P. Claims paid for the year $3,389,875 Expenses 1,068,511 Assets 1,894,812 The new business for the year, secured in New York State alone, was $151,181,000. Prom Vlrfirinia— B. L. Edmondson, V. P. '* There are two home companies in Virginia, upon the assess- ment plan : *The Valley Mutual Life Association op Virginia/ and *The Staunton Life Association op Virginia.* The various secret societies have lodges in almost every town of any size throughout the State. They secured a large membership w^hen established, but I am now under tho impression that addi- tions are now rare." **The Knights of Honor, Royal Arcanum, American Legion of Honor, and others, are charitable beneficial associa- tions, and are giving much comfort to bereaved families, but I am of opinion that there are other organizations, feigning to do business upon the lodge system merely to evade the laws with which our companies are required to comply. This fact demands attention, investigation and such exposition as will bring them into proper relation to the law." Prom West Virfirinia— T. B. Campbell, V. P. Mr. Campbell reports that a law had been passed by the legis- lature placing assessment insurance under the supervision of the State Auditor, who is exofficio Insurance Commissioner. He speaks approvingly of the law. He says: "The several fraternal societies are doing a fair business in our state, and wliile the business of life insurance has never had thai growth in our state that it has had in some of the more wealthy communities, it is certain that assessment insurance is appealmg more strongly each year to our people, and it seems probable that, under the provisions of this bill, confidence will grow more and more. The only companies incorporated under the laws of our state are the "Ohio Valley, op Wheeling, which began business over seven years ago, and the Eqihtable Mutual, of Martinsburg, a younger company, but one that seems to be doing a ^ood business and to have the confidence of the public in the localities where it is working." From Ohio, by D. E. Stevens, in the absence of the vice- president. Mr. Stevens says : " A bill had been presented, and a bad one it was. That we attacked. We amended errors, struck out Section 8,630, the limit of $7,000 in amount of insurance, and of $2.00 per one thousand that can be laid as an assessment, and insertea authority to ac- cumulate a reserve fund, limited and regulated by the laws of the OF LIFE INSURANCE. 181 different companies. We went with the bill thus changed to the Insurance Commissioner and asked him to examine it and give us his opinion in regard to it. As a result of his examination, he told us that lie could endorse the hill from top to bottom, and that he would go before the committee of each of the two houses and urge its passage, as it was directly in the line of all his thoughts. We presented it to the Senate, which it passed by a three-quarters vote ; without oppositions in fact, and without the change of a single line. We went to the house, which we canvassed thor- oughly until we were satisfied as to its att.tude, when we had the bill referred to the Insurance Committee. The Legislature ad- journed on Friday until Tuesday morning, and there was a pil- grimage of many people to the State Capitol that Sunday. On Tuesday morning we aiscovered that something had happened to our bill, and we were never, hy any method that we could bring to bear, or think of, able to ^et it before the House again. It died in the hands of the Committee on Insurance. However, I can sav that, in six years of experience before Legislatures in Ohio, asking for the passage of just laws, I have never found the senti- ment 80 much in favor ef assessment insurance as I found it last winter,in both Senate and House ; and had it not been for the ' something ' that happened on that particular Sunday, I am satis- fied that to-dajr we would have had as crood a law in Ohio as there is in any state in the Union. * * » **The Insurance Superintendent of New York has done us a very great kindness, which, however, was too late to do any good last winter. He has notified the Beneficial Associations, Secret Orders, Odd Fellows, Masonic, and the like, which are organized in our State, that they cannot continue doingbusiness in New York unless the laws of Ohio are changed. Heretofore, these societies or orders were perfectly indifferent, and would not help us by the turning of a hand ; now they are all impressed with the necessity of the passage of proper laws. From Massaohusetts, by Mr. Geo. A. Litchfield. He says : ** We have met the enemy and they are ours. I think that the record indicates a growth of public opinion in the right direc- tions ; and you know, Mr. Chairman, that there is nothing so favorable to success as success. Since the enactment of the Taw, public opinion has seemed to be fully up to it, and, in some cases, in advance of it. The law embraces those features that were ad- vocated by the friends, and had been opposed by the opponents, of assessment insuraace. * * The talk now is, let us have strong and permanent assessment companies that have some money ; and though the bill is, in some respects, a little oppres- sive to honest, small companies, I think in the main that it will work untold good to assessment insurance. From MiohifiTCtn*— Mr. Geo. E. Foote, being called on, said : ** We are in Michigan much like yourselves in regard to honest assessment life insurance. Though we have good laws, we have had a great many more companies on the assessment plan than there was any occasion for; and many of these have made great mistakes, many of them doing business simply and solely for themselves and for the gain that can be made for the time being. 182 THE THREE SYSTEMS We have some ^ood, honestly-manae:ed institutions, and they are doing a good business and are growing. Such of these as have paid their death-losses in full Srom the start and promptly, find that this fact gives them a great prestige in gaining the conndence of our people, especially as there have been so many that have failed to pay anywhere near one hundred cents on the dollar. But many of these have already given up and retired from business, and there are others that must follow them." From niinoia— Ck>l. B. F. Phelps, in the absence of the Vice-President from Dlinois, said: ** As you are probably aware, we had a session of the legisla- ture in Illinois the past winter, but it used up four months in electing a United States Senator, and there was left no time for anything else ; so that it was not propitious for securing any of the changes in the law that we misrht desire. In fact we think that we have a very fair law, and it could hardly be improved except m two particulars. One of these is, that the law is very easy for new organizations — not strict enough in laying down a standard to which they must con- form ; and the result is that quite a large number of institutions have been organized with fraudulent intent by men of a character such as would bring no credit to assessment insurance. I am glad to say that the Insurance Commissioner has been far more strict durmg the last eighteen months in scrutinizing these insti- tutions than previously. But the fact is, we have not in Illinois any association, that is, any leading association, doing a general business, that is up to the standard of this Convention. The gen- tleman who was named as Vice-President last year was conduct- ing an institution that was not up to the standard, but who was on my recommendation simply admitted for last year. It was not an institution, however, that added anything to the strength of this convention. I believe Illinois to be a good field, and I regret that one or two of her associations are not represented here to- day ; but still there are a good many institutions there with fea- tures that are not endorsed by our standard. I am satisfied that at the end of another year I can have from Illinois a better report to make in regard to the work of the general associations and the fraternal orders. The Northwestren Masonic was formerly a member of this convention, and all the gentlemen here would be glad to see it represented again." (The italics, above, are ours. Author). From Pennsylvania.— This State being called, Mr. L. G. FousE responded as follows : '* You are well aware that but a few years ago our State was cursed by the existence of some two hundred companies that were organized not for any legitimate purpose, but for the pur- pose of swindling and fleecing the public under the cover of life insurance. Happily they are out of existence ; they did not con- tinue for a great while. * * * * There was no demand for the two hundred and ten companies to be organized within a period of twelvemonths. It is evident to any reasonable mind that they had some object other than legitimate insurance. They were wiped out of existence by public opinion and legislation, which was secured through the efforts of only, I may say, one or- ganization. We have the number limited in Pennsylvania that are doing business on the assessment plan to perhaps half a doz- OF LIFE INSURANCE. 183 en, and out of that number I may be allowed to say that the com- pany I represent is the only one that has its plan adjusted to the science of insurance and that is doing aggressive work. We have had the pleasure of having quite a nurnber of foreign com- panies come into the field, and I can say that the status of our kind of insurance in Pennsylvania is prospering, and I think the associations that are doing business there are generally meeting with success." Prom Iowa.— H. M. Pickell, V. P. ** Conservative associations have made substantial progress in the way of growth and improved plans, while weak concerns, without reserve, and especially those carrying sick benefits and endowments, have grown still weaker. Some of them are from six months to one year behind in death losses, and in many of them the lapses exceed in number the applications. The * Soci- ety OF THE Ark of Safety,* at Iowa City, has adopted the wise course of retiring from business, and has "transferred its members to the * Guaranty Life of Des Moines.* I am informed that the * Cedar Rapids Mutual Relief Society ' is about to retire also, and transfer to the * Fidelity,' of Philadelphia." In the discussions of the convention, on various topics, we note the following : Mr. Litchfield :— " Do I understand Mr. Harper to say that he believes that one- third of all the claims paid by assessment associations in the first five years are fraudulent?" Mr. Harper:— " In all life insurance companies — I make the statement — one- half the claims presented for payment within the first four years after entrance are fraudulent claims. This statement refers to level-premium companies as well as to our own. I think there are gentlemen here who will substantiate this statement. I do not mean to say we pay them ; I mean to say that the proofs of loss are presented for their payment ; if the policies are incon- testable you would pay those fraudulent claims." Mr. Litchfield:— ** I would like to repeat my question, because it is a very im- portant one. I understand Mr. Harper to say that, in his judg- ment, one-third of all claims that are presented for payment, which, of course, includes all that are paid, in the first nve years after entrance to a company, in his judgment, are fraudulent." Mr. Harper:— "Three or four years— first four years, is my statement." DISCUSSION OP THE QUESTION. ^' Should not this convention exert its influence for the removal of the restrictive legislation, in certain States, wJiicJi proJiihits assessment companies from making definite contracts of insur- ance ? ? »' 184 THE THREE SYSTEMS This discussion is an important one. — So important that we have given it in full. It was participated in by Hon. Q«o. D. Eidridgre, of the United States Mutual Accident Associa- tion, of New York ; W. S. Oaxnpbell, of the Fideiity Mutu- al Life Association, of Philadelphia, Pa. ; E. B. Harper, of the Mutual Reserve Fund Life Association, of New York city ; W, J. Walker, of the Mutual Trust Fund Life Association, of New York city; Geo. A. Litch- fleld, of the Massachusetts Benefit Association, of Boston, Mass.; OoL E. P. Phelps, of the Cove- nant Mutual Benefit Association, of Qalesburg, Dl. ; Geo. B McNeil, of the Massachusetts Mutual Accident Association, of Boston, .Mass., and D. E. Stevens, of the National Life As- sociation, of Columbus, Ohio. In reading the discussion let it be remembered that the ques- tion is not whether the different organizations represented in the conventions shall adojyt and isMue definite contracts of insur- ance; that is not the question, at all — but it is whether or not the convention shall exert ittt influence for the removal of tJie re- strictive legixl(ttio7i, in certain States, which prohibits assessment associations ivom making definite contracts of insurance, if they desire to do so. Mr. Eldridgre opened the discussion and said: *'Mr. President and Gentlemen of the Convention: The question proposed by the Executive Committee pre-supposed in a certain sense a radical change in the system, or in the minutiae of the system of doing an assessment business. At the same time it is a change the consideration of which is forced upon us by the action of Massachusetts during the last winter, in enact- ing that companies, chartered under its laws to do an assessment life insurance business, shall write a contract definite in amount, and unless they are able to pay that amount or do pay that amount, shall cease doing busmess. The radical character of this departure is perhaps rather in appearance than in reality, since the present practice has ^rown undoubtedly from the fact that assessment insurance had its birth in fraternal organizations, or organizations confining their work to the membership of a cer- tain order, whence it took upon itself the form of a provision, voluntary in a certain sense, and therefore liable to fluctuations, and in no sense compulsory upon any member. But we must recognize the fact that during the last fifteen years, the period during which this form of insurance has held any kind of promi- nent place, a very radical change has come upon the businsss, and a system, not of charity, not of benevolence, but of actual business methods, has grown out of it. The result has been a di- vision between organizations common in object, and a class dis- tinct from our fraternal and benevolent organizations have grown up, that claim they cnn furnish absolutely the same bene- fits as the older system ot life insurance — the ' old-line ' system— with the same certainty, but at a lower cost and on a different scale of payment of premium. " If these organizations can do this, they come before the pub- lic simply as business organizations furnishing life insurance, en- OF LIFE INSURANCE. 185 titled to DO consideration at the hands of the legislature or of the public, that other business organizations, dealing in life insur- ance as a business, are not entitled to. For in doing business as a business they are fulfilling the very objects that they claim they were organized to fulfill. But the result of differing practices and differing laws is, in New York, the companies write a contract, saying they will pay a certain benefit to be fixed by the amount collected, according to a fixed scale of assessments; in Ohio it is illegal to write anything but a conditional contract, and so in other States. The result is, we have a sj'^stem claiming a legal status to do insurance as a business, and yet, whenever we meet the system that we claim to be a rival of, in a contest before the people, we are met with the argument from the other side: 'Why, this is not a definite contract of insurance, it is simply a conditional promise to pay, it is simply a promise that you will pass the hat around and pay to the beneficiary whatever you may realize; and that is the statement of your contract and the only obligation you are called upon to meet.* "Now, is this an advantage or a disadvantage to an honestly man- aged assessment company? We are told by the advocates on one side, that to do anything else is contrary to the spirit of assessment insurance. It may be contrary to the spirit of charity or benevo- lence, but is it not directly in the line of insurance, considered as a business transaction? If we cfkn do anything in the way of furnishing insurance, we are able to do something that is trust- worthy, something that our members can depend upon as abso lute, and with regard to which they may feel the same assurance that, if the contract does not become a claim for five, ten, or twenty years from now, they may still rest assured that they will get the amount of insurance paid for, the same as in a sound old-line •company. **What, in practice, has been the course of our business institu- tions? As rapidly as possible, those that were organized on the basis of simply paying what could be collected, have directed their efforts to arriving at a position where their payments shall be the face of their policy; until they have done so, they feel that they are still in an experimental state. Suppose any company that attains the position where it can pay its maximum certificate in full, after doing so for a few years, finds its membership de- clining, and it becomes known to the public that it is unable to meet its contract, it is no use for it to urge that its contract does not say it is going to pay $5,000, but only that it will pay what is collected, not to exceed $5,000; for, if it ever comes to the point where the members find that the contract is worth only 90 per cent, of its face, the result inevitably will be that next it will be worth less than 90 per cent., and the dissolution of that company is only the question of a short time. If the managers of these companies are prudent business men, they take counsel of the present and of the future to the end that they may put them- selves in a position where in any contingency they will be able to meet the contracts they have out. *' To make this obligatorv by law, places every company be- fore the public in an attitude thai it has certain definite obliga- tions which it has entered into, and which it must make prepara- tions in the present to meet in the future; but if the matter is contingent; if it is simply what we can pay, the company has no legal, however strong a moral obligation it may have, to make ■preparations for the future. Therefore, every such institution, unless it recognizes this obligation, in time becomes a direct weight upon the interests of those who are laboring to put their 186 THE THREE SYSTEMS companies on a good standing, and will aid in the end in bringing- discredit upon them and injury to the business. Therefore, afl of those institutions which are conducting their business honest- ly, although their contract is simply contingent and not absolute, are determined to pay and to be able to pay their losses in full in any event, and the law which prohibits them from making a defi- nite contract fosters the growth of a number of institutions which are falsely claiming to do just what the others are doing, and it is plainly for the benefit or those organizations that are beings conducted honestly, that this restriction should be removed, una not only that the restriction should be removed, but it should be made obligatory upon our companies to write a definite contract. Indeed, the proposition that these institutions should be per- mitted to write a definite contract of insurance, and in fact as I have stated before, be obliged to write it, rests upon the simple consideration that, if we are what we pretend to be, that if our system is anything more than a mockery and a pretense of the present to calch victims who will be swindled in the future, we must make a contract which will be good for five, ten, fifteen, or twenty years to come, just as certainly and absolutely as that of the old-line system. That, I think, is the idea on which the Mas- sachusetts law is based. It was an acceptance of our claim that this is a system, not of charity, but of insurance; and that there should be no chance to evade the payment in full of claims, no chance that the amount to be paid is the amount collected from an assessment up to a certain limit, and that there should be no chance under this system of pretending one thing and then doing another, this provision was adopted. To mv mind it is not only wise, but it is right to the point where our ef- forts must be directed. If we would conduct the business hon- estly under it, we must make such preparations for the future aa are necessary to the integrity of the undertaking, and these must be set forth in our contracts with our members. If we do not do- th is, if we assume obligations without preparing ourselves to meet them at maturity, there should be but one natural penalty, and that is the loss of the charter and the stepping aside for some one else to do the business. No company that is organized on a conditional basis, with the idea of doing business as a business, expects to go on in future years, paying ten, fifteen, twenty, or twenty-five per cent, of the face or its policies, without reaching a point where it can make good its contracts for their face, but companies will realize far better the obligations that this implies^ under a definite than they possibly can under a conditional con- tract.*' 'W. S. Campbell, Esq., said:— '* I do not agree altogether with what Mr. Eldridge has said, for this reason. In view of their defective plans of insurance, I think it is exceedingly unwise for the Convention to permit all assessment companies to issue definite contracts of insurance. It is one thing to become a party to a contract, but it is an entire- ly different thing to discharge that contract. If the laws were so amended that all companies can and must issue definite contracts of insurance, then the laws sanction the contracts made by those companies who have not the ability to carry them out. If it be true that a reserve fund or an advancing rate of assessment be necessary to the permanence of an assessment company, then to pass a law of this kind, allowing all companies to issue them, would be an injury to the business of assessment insurance and to different organizations in this country — all of those companies OP LIFE IN8UBANCE. 18T that have not the ability to carry out definite contracts of insur- ance, and I therefore think it would be unwis& to permit com- panies of that kind to issue contracts, when the managers would not have the ability to fulfill them. On the other hand, it would be unfair and unjust to exclude a healthy association that haa^ the ability to discharge its contracts from issuing an absolute pol- icy of insurance. I would suggest, therefore, that such assess- ment organizations as can conform to a certain standard, and have the ability to carry out a definite contract, should be al- lowed to make them, but those companies that cannot conform to such a standard and have not the ability to fulfill their con- tracts, should not be allowed to make them. Mr. Eldridfire:— '* It seems to me that the very argument advanced against compelling a definite contract — although I acknowledge the word 'compelling* goes rather outside the question, which is simply a question of removing restriction — is one of the strongest in favor of such a contract. These companies organized upon plans that render it impossible for them to fulfill a definite con- tract, are organized for the purpose of inducing people to insure their lives, Nine out of ten who insure their lives under a con- ditional contract, with a business organization (and I draw the line of distinction as between business and fraternal organiza- tions), suppose they are insured for the maximum amounts of their certificates; they expect that their beneficiaries will get the maximum amount named in their certificates. If the law com- pels every institution to write a definite contract, to guarantee to paj a fixed sum in case of death, the result will be one of two things; either these institutions will adjust their plans so that they will be able to do this thing, or else, when they fail to pay the amount of their first death claim, the ini^titution will be closed up and put out of the way of companies that can make a definite contract. I am in favor of writing an honest certificate or policy as against a contingent or a benevolent contribution. I am in favor of compelling a definite contract and sweeping out of the way a class of organizations that never intend to practise correct methods, but that now stand in the way of companies that do." Mr. Harper: — **This, in my judgment, is a subject of the utmost import- ance. I think we ought to take up the questions that are nega- tive. It may be, that by discussing these negative questions we may be converted and become advocates of the same. *' Our good friend, Eldridge, we all know has a level head, and his thoughts are carefully prepared and entitled to due con- sideration. Mr. Campbell and Mr. Fouse belong also in that line of gentlemen of intelligence. But the question is an important one. In the State of New York we have a law which says that no contract shall be made by an assessment organization that is definite. In Massachusetts we have a law which says that no company shall be admitted unless it makes a definite contract, or words to that effect. Various States of the Union have passed laws i)rohibiting a definite contract on the part of an assessment organization. The interpretation of a definite contract by the insurance commissioners states, if I understand it, that the com- Eany issuing the i^me shall have a reserve fund and cash on and, which, added to their future premium, will equal the face 188 THE THREE 8T8TEM8 of the policy in an average duration of life. Apply that rule to Mr. Campbell's proposition of »n advancing rate, and the future premium which the member has agreed to pay will equal the future payments which the company has agreed to pay, and the cash on hand will be enough, as you will see; consequently, we could comply with the law if the departments would so con- strue it. " The difference between a contract when the rate increases each year, and the contract issued by the Level Premium Com- panies, is this, that the level premium companies agree that the^ will receive a definite sum. year in and year out, and pay a defi- nite sum. The result is that they have agreed to receive from the member a certain sum of money within an average duration of life, and at the expiration thereof th^ agree to pay to the member a certain sum of money; the difference between what- ever they have agreed to receive and what they have agreed to pay is the reserve fund. I nm not entirely opposed to the princi- ple embodied in the question, and neither am I prepared to advo- cate it at the present time, without further consideration, for the reason that the courts of New York have decided that a member is liable for the contracts or liability of his contract; and it would seem to me that it would become a very dangerous thing for a person to give an application for insurance in one of these com- panies unless it was able to meet it; and its ability to meet the contract will depend upon the persistency of the members. "'Now, apply that thought along through the line, and while Mr. Campbell s company, or Mr. Campbell s plan, may have ad- vocates, the rates must be founded upon scientific principles, that the members have agreed to pay in the future as much as the companies have agreed to pay in the future; yet, if the members refuse to pay in the future what they have agreed, and drop out, it might be that individual members would be liable for the full conditions of these contracts. I only throw this out for the con- sideration of the convention. * ' Then we should take another step, and would see what effect that would have on our ability to obtain new business. If the opponents of this system should send out their literature to say that the individual members making an application to an assess- ment organization becomes personafiy liable for the contract is- sued by it, the reply now is that we agree to pay that which we receive; the reply then would be we agree to pay a definite sum, and if persistent members do not pay it the laws say they may be forced to pay this definite sum of money." Mr. Litchfield:— " Has the practice been to make that contract good?" Mr. Harper : - "Xo, sir." Address of Hon. Julius L. Clarke, formerly Insur- ance Commissioner of the Commonwealth op Massachu- setts, delivered Thursday, August 27, 1885. After a few preliminary remarks, Mr. Clarke said: " Lon^ before Assessment Life Insurance began to assume the character and importance of a ^reat Commercial enter- prise in this country, I had become familiar, through personal OF LIFE IN8UBANCB. 189* visitation, and acquaintance at the home offices of foreign friendly societies and fraternal organizations, and others of similar character abroad, with the administiation and working of their system, from which our own are the outcome; and in that convention I had come to see and realize, as an official and as a private individual, the growing necessity and demand for a sys- tem of life insurance that should be both popular and within the reach of the masses of the people. I mean that portion of our population which, from pecuniary considerations, are unable to comply with the terms of the level-premium insurance. And please understand when I make this reference, I mean no impli- cation or criticism of either system. I deprecate antagonisms- bet ween them, for I believe that each has its field and its mission to occupy and fulfill. **Now, gentlemen, when I refer to the topics which have been brought before me I want to emphasize one point, which I con- sider imperatively important to assessment insurance in this- country. Remodelling or reformulating, as I have during the present year, the business methods of some of our assessment organizations in this and other States, I have felt the necessity of a well defined compilation of mortuary experience as appertaining- to American Assessment Insurance Companies. Within a few days I have received from a friend in London a report of the friendly and other societies in England for the last ten years, giv- ing mortuary and finan- ial experience— just such as is wanted for use in this country, but compiled from our own organizations. ** We have no reliable, no intelligent compilation of American experience under this system of insurance; and that is what I think you will find an absolute and growing necessity, and one which ought to be secured at the earliest possible date. I say this in view of the fact that assessment life insurance in this country has come to stay, and not only to stay, but to occupy in the future a position which will place it side by side with our great public benefactions. Why, with four thousand millions of outstanding insurance at the close of 1884, and the payment of twenty-three millions in death claims during the year at an ex- pense of only three million five hundred thousand dollars — with such a record as that, its working expenditure computed upon the same basis as that adopted for level premium insurance com- panies — I mein computed upon the mean amount of outstanding insurance— shows its expense ratio to be the merest bagatelle. 1 speak in no unfriendly criticism of level -premium companies; both classes have their mission; I believe in both. I believe in yours as within the reach of the masses, who cannot avail them- selves of the privileges of the other. And now, gentlemen, with such a record as these statistics present to the people of this country, I venture to say that neither you nor I, nor anybody else, can begin to anticipate or measure the possibilities of As sessment Life Insurance — possibilities already so far realized as warrant the promise of a great public benefaction which ought to be perpetuated." 190 THE THREE SYSTEMS CHAPTER XVI. The Progress of Life Insitiance. — Interest. — Interest Laws OF The States.— Explanation of the Tables. — Tables. THB PROORBSS OF LIFE INSURANCE. (J\>/r York Insurance Hepori, 1885.) The liistory of the life insurance business, transacted by the twenty-nine companies licensed to carry on business in this State, presents some remarkable features. Omitting for the present purpose of comparison all reference to the 1,092,429 industrial policies outstanding, the increase from 49,000 policies covering $141,497,978, reported in 1859, to 750,567 policies, insuring $1,- 870,728,059, in 1884, is truly wonderful. The twenty-five years that have passed since the first state- ments were rendered have not been a continuous era of prosperi- ty, either with the companies or the business community. The rebellion, the financial panics during its progress, and since its close, the failures of over forty-one companies and the distrust and doubt cast on all thereby, have had their militating influence during the greater part of the time referred to. Yet, to-day, the companies that have sui-vived these disastrous periods present a £nancial growth that stands unrivaled in the history of monetary institutions, and with a prospect of continued prosperity that will scarcely admit of comparison. The payment of $897,272,182 to beneficiaries, and an invested account of $491,487,719, entitle the trustees to a reward which no personal expression will com- pensate. The achievement of this grand success belongs to no one who has passed away, for the men who are identified with it continue to labor unceasingly in their trust. It is such an easy task to criticise the companies without cause, that it is not a sur- prise to find so many critics; the wonder is that there should be a limit to their number. But so it is, when either individuals or 'corporations have succeeded in business, the professional carper prepares himself to hint— for his own safety it never gets beyond an inuendo— that something must be wrong. The corporation receiving its chartered life from the State, and depepding upon it for its existence, unlike the individual, is subject thereby to an ■attack hy a method which admits of no redress, notwithstanding OF LIFE INSURANCU. 191 the maliciousness and evil motive of its originator may, and gen- erally is, as evident as the noon- day sun. Through all these difficulties the companies have thrived, and at this date, after complying with all the rigid requirements of the State laws, they show a surplus of $81,811,191.16 above every liability. It is admitted that in some of the defunct companies there have been grave errors of management, and instances have oc curred of peculation and fraud that have been astounding. All these have been described, and the punishment of the offenders sought, and in some instances secured, in the way fixed by law for the trial and conviction of evil-doers. These cases give no license, however, to destroy sound institutions by drag-net in- quiries characterized by less than a little knowledge of the busi- ness, and prompted by the hope of a reward not looked for in the answers. Notwithstanding all the possibilities of injury that may be open in this way, to create distrust and fear among the policy-holders, the companies continue to gain new adherents. During the past five years they have had an increase of 140,000 policy holders and $394,000,000 insurance. The assets have in- creased over $73,000,000 and the surplus $10,000,000 in the same time. These facts are cited to show that within the companies there is no discontent to be found. The trouble is with those who' are not within them, but want to be. Nevertheless, the or- ganizations will doubtless continue to add new members and command patronage at home and abroad. It is not to be as- sumed that they will ever be free from imputation and harass- ment, even if they continue their wonderful improvement in re- sources and public confidence, unless, indeed, there should be like progress in human nature, and a corresponding decrease in the wants of man. TABLE H. Taken from the Official Report, 1885, of the Commissioner of Insurance, for the State of New York, showing the premium re- ceipts of the companies and the payments made by them to poli- cy-holders, from date of organization to December 31, 1884. New York Ooznpanies. COMPANIES. Brooklyn Equitable Germania Home Homoeopathic Manhattan. . . Commenced Business. July 1864... July,. . . 1859. .. July, 1860... May, 1860... July,... 1868... August, 1850... Premiums Received. $ 7,918,119 136,161,389 25,969,940 14,021,140 2,571,789 29,014,748 Paid to Policy-holders. 5,597,346 81,072,487 16,159,775 9,515,925 1,552,515 22,490,777 TBE THBXE BTSTEKS New York Coupanies. — Continued. ..„»,... '^TuS™."' RteeLved. Paid ID Policy-Holdm. June. 1667. February, 1843. April, ...1845. August. ..1875. March 1850, February, 1860, 15,1.18,485 270,891,583 130,574,987 648,752 17,056,688 19,291,397 Mutual New York Provident Savings.,.. 216,094,312 81,113,22» 267,281 Totals 1669.866,957 Oompanies of Other States. I^nnkn.. KcccivEd. January.. 1&50 Septemb'r.ieS! ¥ 54,902,748 6,669.137 Berkshire, Mass 9.599,691 Connecticut General . . 3clober.,.1885 3,683,934 1,964,157 Connecticut Mutual. . . December, 1841 137,55S,47f 113,258,251 9.728,ea( 6,512.821 August... 1B51 30,468,7a( 18,798,910 Mutual Benefit, N, J., 102,268,30( 83,672,057 National, Vt il-ebruary, 186( .1,65.5,122 8,84.5,195 NewEng.Mutual.Miiss Oeceniber.lSif 46,701,72) 87,0M,90» Morthwestem, Wis. . . . Novemb'r.lSof 48,837,92( 84,135.048 May 1847 May mi June 1665 21,793,688 33,870,868 ! 3.566,667 3.406,530 14,145,150 912,589 6.160,363 Travelers, Conn July 186f 10,344,262 Union Cenlral, Barcb.,,.186: 6.343,07t Union Mutual, Me,.,. October ..1849 27,309,196 20,838,479 Totals i 1 . *!,a49,B47,547.J8B7,37a,182 INTEREST. iDterest. in the sense of recompense for money lent, ori^na- ted very early in the world's history. There are frequent allu- sions to it iothe Scripture, under the title of "u*iiry," which was tlie old English word for interest, Robertson tells us that the flsed rate of interest in the 13th century was tioenl// per cenl. In 1560 it was fixed in Spain, Ger- many, and Flanders, by the Emperor, CharltaV,, at twelve per cent. Not until the 15th century were Christiant allowed to re- ceive interest on money. Jews were the only usurers. The low- OP LIFE INSURANCE. 193 est rate of interest in Athens was ten per cent, per annum, and the highest thirty-six per cent. In Rome similarly exorbitant rates were exacted. About the year B. C. 346, the rate was limi- ted to five per cent. ; and five years later, the practice of taking interest, for money was forbidden, altogether, and he who re- ceived more than he advanced was rendered liable to four-fold restitution. The earliest enactment upon the subject mentioned in English history, was A. D. 1197, forbidding Christiana to take interest for money. In 1546, in the 37th year of the reign of Henry VIII., an Act was passed limiting the legal rate of inter- est, in England, to ten per cent, per annum, but it was repealed. May Ist, 1552. This last Act was entitled "A Bill against Usurie." and re-enacted the prohibitions contained in previous Acts, with similar penalties. The Act of 1552, was in force un- til 1571, when the legal rate was fixed at ten per cent. This con- tinued until 1624, when the rate was reduced to eight per cent., and the word ** interest " was first used instead of usury; it was afterwards reduced to six percent, and, in 1714 to five per cent., remaining so, with one or two exceptions, for a few years, when it was suspended and still remains so. Most other countries have, at some period of their history, .found.it necessary to limit the rate of interest. In 1228 the rate was fixed, at Verona, at twelve and one-half per cent., per annum. In 1242, James I., King of Aragon, fixed it at eighteen per cent. In 1270 the legal rate at Modena was twenty per cent. There is an edict of Phillip Augustus, near this period (1272), limiting the Jews, in France, to forty -eight per cent ! In 1311 Phillip IV. fixed the interest that might be legally exacted in the fairs of Chanipagne at twenty per cent. In 1336 the Republic of Florence borrowed money of individuals upon an assignment of taxes at fifteen per cent. In 1490, at Piacenza, the rate was as high as forty 'per cent. In 1491, the first public sanction, by the Popes, to the payment of interest, was given ! The price of the Public Funds is perhaps the best criterion in any country, and has been taken as such by the most experienced writers on the subject. The Public Funds indicate the abundance or scarcity of money; are affected by war and peace, and by national prosperity or ad- versity. They may therefore be termed the national thermome- ter. As the price of the Public Funds goes down, the rate of in- terest rushes up. War and scarcity operate in this direction, and afford us another remarkable instance of the operation of the law of compensation. War and famine accelerate the rate of mortality, but they also improve the rate of interest, so it is probable that Assurance Offices with large accumulation of funds, realize, under such conditions, as much by excess of interest on their investments as they lose by the excess of mortality. 104 THE THREE SYSTEMS The relative effects of nmple and compound interest may be seen in the following : TABIiB No. 2. Rate per cent, per At stin pie interest it will At compound interest it will annum. double. double • 2 In 50 years In 85 years ^H 40 28 3 ^H 2SH SH 28H 20K 4 25 i^H 4>^ 22M 153C 5 20 14« 6 16H 12 7 14M io« 8 12H 9 9 9 8 10 10 7X 3fr. Francis Bailey calculated, up to the year, 1810, that, if one penny had been put out at five per cent., compound interest, at the birth of Christ, it would have amounted to more money than could be expressed by 357 millions of Globes, each equal to the earth in magnitude, all of solid gold of standard quality, worth, at the mint price, three pounds, seventeen shillings and a half penny, per ounce ; whereas, if the penny had been put out at the same rate, at simple interest, the amount in the same time would have been only seven shiUings and seven pence half penny!! Mr. EUllman extended the calculation up to the end of the year, 1846, giving as the result, two thousand one hundred and seven millions, five hundred and thirty thousand, eight hun- dred and sixty-four worlds of solid gold I Supposing the diame- ter of the world to be 8,000 miles, these globes, placed in a ^straight line, would reach into space sixteen billions, eight hun- dred and sixty thousand two hundred and forty-six millions, nine hundred and twelve thousand miles, quantities too large for human comprehension. (O. "Walford — 1867.) The practical advantagre in saving and compounding, even small sums of money, for a term of years, is shown by the following : Every man, at age 50, who has saved $1.25, per day since he was 21 years old, and compounded it, annually, at 4 per cent., is worth $25,000 ! 88 cents per day at 6 per cent. Every man, at age 55, who has saved $1.51 per day, since he was 21 years old, and compounded it, annually, at 4 per cent., is worth $40,000 ! Only $1.00 per day, at 6 per cent : Every man, at age 60, who has saved $1.75, per day, since he was 21 years old, and compounded it, annually, at 4 per cent, is worth $60,000 ! ! OF LIFE INSURANCE. 195 TABLE No. 3. INTEREST LAWS OF THE STATES. (From the Bankers' Almanao and Reffister.) State. Rate per cent. Alabama Arizona Arkansas . . . California... Colorado. . . . Connecticut. . Dakota Delaware Dist. of Col- umbia Florida Georgia Idaho Legal. I By special contract. Illinois. Indiana. Iowa . . . Kansas... Kentucky Louisiana Maine Maryland Massachusetts Michigan | 7 Minnesota. . . 7 8 10 6 10 10 6 7 6 6 8 7 *10 6 6 6 7 Mississippi. . . Missouri Montana Nebraska Nevada New Hamp- shire New Jersey. . New Mexico. New York.. . North Caro- lina Ohio Oregon 6 6 10 7 10 6 6 6 6 6 6 10 6 10 No limit No limit 6 12 ' 6 10 No limit 8 18 8 8 10 13 6 10 5 8 6 No limit 6 6 6 No limit 10 10 10 10 No limit 10 No limit 6 6 12 6 8 8 12 Penalty of Usury. Loss of interest. None. Forfeiture of principal and interest. None. None. (8 per cent, allowed on town and county bonds. ) None. {Forfeiture of contract. (No limit in five counties named. (Act of Feb. 21, 1861. Forfeiture of contract. Forfeiture of all interest. None. Forfeiture of all interest. Forfeiture three times the excess of interest over 18 per cent. Act Feb. 21, 1879. Forfeiture of all the interest. Forfeiture of interest over 6 per cent Forfeiture of interest and costs. Forfeiture of excess of interest over 12 per cent. Forfeiture of excess of interest. Forfeiture of interest. None. Forfeiture of excess interest. None, (bix per cent, and judg- ments.) Forfeiture of excess interest. Forfeiture of contract, if more than 10 per cent, is charged . Forfeiture of interest overlO per cent Forfeiture of all interest None. Forfeiture of all interest and costs. None. Forfeiture 3 times excess of interest Forfeiture of all interest and costs. None. Forfeiture of contract ; $1,000 fine ; 6 months' imprisonment. Forfeiture of double amount of in- terest. Forfeiture of excess interest. Forfeiture of interest, principal and costs. ^Usurers liable to arrest for misdemeanor. IM THE THREE 8T8TEMS Interest Laws. — Continued. « Rate per state. oent. Penalty of Usury. Legal. By specia contract Pennsylvania 6 6 Forfeiture of excess interest.— Act of May 28, 1858. Rhode Island 16 No limit Forfeiture, unless a greater rate is contracted. Soutli Caro- lina 6 10 Forfeiture of all interest. Tennesee . . . 7 6 Forfeiture excess interest over 6 per cent. Texas 8 12 Forfeiture of all interest. Utah 10 No limit None. Vermont 6 V Forfeiture of excess interest. Virginia 6 8 Forfeiture of excess interest. Washington Territory 10 No limit None. West Virginia 6 6 Excess credited on sum due. Wisconsin 7 10 Forfeiture of all the interest. Wyoming — 12 No limit None. tKate on judgments unless othen/ise expressed. tOn Rail Road bonds only, a. On open accounts not more than six per cent., six months after delivery of last article, b. Any rate may be taken on loans exceeding $5,000, secured by warehouse receipts, bills of lading, etc. EXPLANATION OF THB TABIiBS. Table No. 1.— Col. (1) is made up as follows: The legal reserve, for instance, Actuaries' 4% on $1,000 of insurance, 0^ dinary Life Plan, issued at age 10, is $4,115 at the end of the first policy year. The present value of $4,115, for one year, 4 percent, interest, is $3.96, and, therefore, this $8.96 at interest for one year — until end of first policy year — exactly equals the lega) reserve at end of year. The $3.96 is the *' Reserve Ele- ment" or i;erm, that produces the legal reserve, end of year. It is not the kf/al reserve at the beginning of the year — that is the net premium, or $10.43 — but it is the ^* Reserve Element" as we call it. In a similar manner all the reserve elements at the differ- ent ages, from 10 to 99, inclusive, going to make up Col. (1), are produced. Col. (2) is made up as follows: Confining ourselves to amount and kind of insurance, as above, and the age of entry, the net annual premium, as stated above, is $10.43. This is composed of the reserve element and the mortality element. The reserve ele- ment is $3.96, and, taking it from the net annual premium, , $10.43, leaves $6.47, which is the mortality element. The other OP LIFE INSURANCE. 197 mortality elements are found in a similar manner, and all of them from age 10 to age 99, constitute Col. (2). Col. (3) is found by adding Col. (1) to Col. (2), which, at age 10, gives $10.43, and taking one-third of it, $3.48, we have the expense element. Similarly with reference to all the other ages. Col. (4) is columns (1), (2), and (8) added together. At age 10. it is $3.96+$6.47+$3.48, equals $13.91; and sunilarly with refer- ence to all the ages from 10 to 99, inclusive. These three columns constitute the elements of the gross level premiums, the first year, for $1,000 of ordinary life insurance, at the ages named, when they are based on the Actuaries' Table of Mortality and 4 per cent, interest. The elements of other kinds of premiums — Limited-payment Life, Endowment, etc., etc. — may be ascer- tained in a similar manner by using the reserve end first policy year, net premium, etc., etc., applicable to these several kinds of insurance. Table No. IJ^.— Col. (1) is identical with Col. (6), Table No. 16, and is ascertained by mathematical calculations. Col (2) is one-third of Col. (1). Col. (3) is columns (1) and (2) added to- gether. It is the net natural premium loaded thirty-three and one-third per cent. Table No. 2.— No explanation required. Table No. 3. — No explanation required. Table No. 4. — Required tJie amount of $1.00 per annum, at 5 per cent,, simple interest, for five years. One dollar is on in- terest for five years; one for four; one for three; one for two, and one for one year. The interest on the first dollar invested is three cents per year for five years, amounting to 15 cents. The interest on the second dollar invested is 3 cents per year for 4 years, amounting to 12 cents. The interest on the third dollar amounts to 9 cents; on the fourth dollar, 6 cents; and on the fifth dollar, 3 cents. These different sums — 15 cents, 12 cents, 9 cents, 6 cents and 3 cents— added together amount to 45 cents, which added to the principle — $5.00 — erives $5.45. The same result would be ascertained in Col. (1) at the right hand of (5) in the year column, at a glance; and similarly with reference to any other rate of interest, for any time, named in the table. To as- certain the amount of $100, $500, or any other sum, first find the amount of $1.00 by the table, and then multiply this by the num- ber of dollars. Table No. 6. — What will $1.00 amount to, compounded, an- nually, at 6 per cent, interest, in 30 years? By looking at Col. (6), in the table opposite (30) in the year column, we find $5.74, the answer. For 40 years, it amounts to $10.29, and so on. For other rates, times and amounts, first ascertain the amount ot 198 THE THREE SYSTEMS. $1.00 by the table, and then multiply this result by the number of dollars. Table No. G.— What mllSLOO per annum amount to, com- poundedy annually, at 6 per cent, interest, in 30 years? In Col. (d) of the Table opposite (80) in the year column, we find $83.80 the answer; $40 per annum thus compounded would amount to 40 times $88.80, or $8,852, and similarly with reference to other amounts, at other rates of interest for a longer or shorter time. Table No. 7. — How much mil $1.00 per annum, for 10 years, compounded, annually, at 5 per cent, interest, amount to in J^O years? In Col. (5), opposite (40) in the year column, we find $57.08 the answer. $80 per annum thus invested would amount !o eighty times $57.08, or, $4,56640, and similarly with reference to other amounts and rates for a longer or shorter time. The an- nual investment in this table, whatever it may be, terminates at the end of the first ten years; but the compofinding continues until the end of the time designated. Table No. Q,—Hou> much wiU $1.00 per annum for 15 years, compounded annually, at 4 P^ cent, interest, amount to in SO years? In Col. (4) opposite (80) in the year colunm, we find $37.50 the answer. $100 per annum thus invested would amount to 100 times $37.50. or $3,750, and similarly with reference to other amounts and rates, for a longer or shorter time. Table No. 0.— What will $1.00 per annum for £0 years, compounded, annually, at 6 per cent, per annum, amount to in 40 years? In Col. (6) opposite (40) in the year column, we find $125.05 the answer. $90 per annum thus invested would amount to 90 times $125.05, or $11, 254.50, and similarly with reference to other amounts and rates of interest, for a longer or shorter time. Table No. 10.— If $1.00 be due and payable Jfi years hence, and mA)ney will earn 4 P^^ cent, per annum, compound interest, during that time, what is the present value of the dollar? In Col. (3). opposite (40) in the year column, we find $.2083 — nearly 21 cents — the answer; that is to say 21 cents invested 40 years, and made to earn 4 per cent, compound interest, annually, will just exactly amount to the $1 in 40 years. Twenty-one cents paid down to-day, or $1 paid in 40 years from now, are equivalent sums, if money be worth 4 per cent, per annum compound inter- est. The present value of $50 would be 50 times $.2088, or $10,415. Table No. 11.— What is a contract, requiring the payment of $1 at the end of every year for the next 40 years, worth, now, as- suming money to he worth 5 per cent, compound interest? In Col. (5) opposite (40) in the year column, we find $17.1591 the answer. In other words $17.1591, paid down in one sum is equivalent to OP LIFE INSURANCE. 199 the payment of $1 at the end of every year for 40 years. Com- pare Table No. 11 with Table No. 6. Table No. 1 2. — How much money must he invested every year, and compounded, annnaUy, at 6 per cent., to amount to $50,000 in 25 years? In Col. (6) opposite (25) in the year column, we find $17.20. This is the uniform annual investment requisite to pro- duce $1,000, at the rate and for the time assumed. To produce $50,000, the annual investment must therefore be 50 times $17.20, or $860, the answer. Table No. 13. — How much vnoney must be invested, every year, for 10 years, only, and compounded, annuaUy, at 6 per cent, interest, to amount to $1,000 in 20 years, from beginning of the in- vesting period? In Col. (6) opposite (20) in the year colunm, we find $39.97 the answer. To produce $50,000, multiply the $39.97 by 50, making $1,998 50; and similarly with reference to any other amounts, and rates of interest. Table No. 14. — How much money must be invested, every year, for 15 years, only, and compounded, annually, at 4 p^ cent, interest, to am>ount to $1,000 in SO years, from the beginning of investing period? In Col. (4) opposite (80) in the year column we find $26.66, the answer. To produce $10,000 the annual invest- ment must be tCQ times $26.66, and similarly with reference to other amounts. Table No. l&.— How much money must be invested, every year, for 20 years, only, and compounded, annuaUy, at 8 per cent interest, to amount to $1,000 in 3S years? In Col. (8) opposite (33) in the year colunm, we find $7.44, the answer, and similarly with reference to other amounts, etc. Table No. 16.--This is the celebrated Actuaries* Table of Mortality, the history of which has been given in another part of this book, with several other columns added. Columns (1) and (2) constitute the table, proper. Col. (3) is obtained by dividing the number in Col. (2) opposite each age by the number in Col. (1) opposite the same age. Col. (1) represents 100,000 persons living at age 10, at the beginning of the year, and Col. (2) shows that 676 of them died during the year. 99,324 lived to bo 11 years old, but 674 of then^died before they became 12 years old, and so on, until they aU died, only one single person of the 100,000 at age 10 reaching the age of 99, and he dies before attaining the age of 100! Column (3) is very instructive. It shows that at age 20, over seven persons die during a year out of 1,000 living at the begin- ning of the same year; at age 25, nearly eight die; at 30, nearly eight and one half ; at 35, more than nine and one-quarUr; at 40, more than ten and one-third; at 45, nearly twelve and one-quarts; 200 THE THBEE SYSTEMS at 50, nearly sixteen; at 55, nearly twenty-Uco; at 60, over thirty; at 65, over /(prtyfour; at 70, nearly sixty-five; at 75, over ninety- fite; at 80. over one hundred and forty; at 85, over two hundred and fire; at 90, nearly three hundred and twenty-four; at 95, over five hundrtd and eighty-four; and, at age 99, one thousand persons die durinsr the year out of one thousand living at the befifinninff of the year. Taking the same number of persons at each of the ages, and noting the comparative number .of deaths; we find that more than twice as many die at 50 as at 25; more than twice as many at 61 as at 50; nearly twice as mauy at 70 as at 61 ; more than twice as many at 80 as at 70, and so on. The per cent, of deaths increases very rapidly after 55, when many of our assessment companies cease grading their rates, if, indeed, they ^ade them at all after entry! Column (4) gives the expectation of life at the different ages. For example, at age 10, the average of after life is 48 years and 86-100 of a year; at age 32, it is about thirty-three years, and so on. Column (5) gives the net level annual premiums for insuring $1,000 for life, at the different ages. These premiums loaded from twenty five to forty per cent., varying with different companies, constitute the table rates found in the rate books of Level Pre- mium Companies, for $1,000 of ordinary life insurance. Column (6) gives the natural premiums at the different ages. This column is the basis of rates for the Natural Premiiun Com- panies, and the better class of Assessment Associations, of which much has been said in previous pages. Table No. 17.— Remarks similar to those made with refer- ence to Table No. 16 can be appropriately made with reference to this table. Both tables are very extensively used Table No. 18.— Fully explained. Table No. 10. — Fully explained and frequently referred to in other pages. Other Tables, A, B, C, D, etc, etc., are used in explanation of facts and principles stated, and are readily understood in the application thus made of them. TABLES. 202 TABLE Showing the elements of which a Level An- composed, based on the Actuaries' Table Agb. Reserve Mortality Expense Gross Level element. element. element. premium. Col. I. Col.a. Col. 3. Col. 4. 10 $3.96 $6.47 $3.48 $18.91 11 4 13 6.50 3.54 14.17 12 4.32 6.52 8.61 14.45 13 4.51 6.56 8.69 14.76 14 4.70 6.60 8.77 15.07 15 4.90 6.64 8.85 15.89 16 5.10 6.70 8.98 15.73 17 5.31 6.76 4.02 16.09 18 5.54 6.81 4.12 16.47 19 5.76 6.88 4.22 16.86 20 5.98 6.97 4.32 17.27 21 6.20 7.07 4.48 17.70 22 6.48 7.18 4.54 18 15 28 6.74 7.22 4.66 18.62 24 7.02 7.81 4.78 19.11 25 7.31 7.41 4.91 19.63 26 7.61 7.52 5.04 20.J7 27 7.92 7.64 5.18 20.74 28 8.25 7.76 5.33 21.84 29 8.59 7.89 5.49 21.97 30 8.95 8.02 6.66 22.68 31 0.34 8.15 6.83 28.32 32 9.72 8.82 6.01 24.05 83 10.13 8.49 6.20 24.82 34 10.50 8.73 6.40 25.68 85 11.04 8.83 6.62 26.49 36 11.53 9.01 6.85 27.89 37 12.07 9.19 7.09 28.85 38 12.62 9.40 7.34 29.36 39 13.22 9.60 7.61 30.43 40 13.86 9.82 7.89 31.57 41 14.54 10.05 8.19 82.78 42 15.25 10.30 8.52 34.07 43 15.95 10.64 8.86 85.45 44 16.63 11.05 9.28 86.91 45 17.31 11.54 9.61 88.46 46 17.97 12.11 10.03 40.11 47 18.64 12.75 10.46 41.85 48 19.33 13.44 10.92 43.69 49 20.06 14.17 11.41 45.64 50 20.78 15.00 11.92 47.70 51 21.53 15.89 12.47 49.89 52 22.29 16.86 13.06 52.21 53 23.08 17-92 18.66 54.66 54 23.90 19.05 14.32 67.27 For explanation, see page 196. 208 No. I. nual Life Premium for $|,000 of Insurance is of Mortality, and 4 per cent, interest. Age. Reserve Mortality Expense Gross Level element. element. element. Premium. CoL X. Col. a. Col. 3. col. 4. 55 $24.78 $20.30 $15 01 $ 60.04 50 25.59 21.64 15.75 62.98 57 26.50 23.07 16.58 66.10 58 27.42 24.65 17.35 69.42 59 28.37 26.35 18.25 72.97 60 29.27 28.29 19.19 76.75 61 80.20 80.37 20. .19 80.76 62 81.11 82.67 21.26 85.04 68 82.03 85.17 22.40 89.60 64 82.98 87.91 23.61 94.45 65 83.84 40.88 24.90 99.62 66 84.70 44.15 26.28 105.18 67 85.58 47.66 27.74 110.98 68 86.45 51.46 29.31 117.22 69 87.36 55.53 80.97 128.86 70 88.25 59.95 82.74 130.94 71 89.15 64.72 84.62 138.49 72 40.06 69.85 86.64 146.55 73 40.97 75.39 88.79 155.15 74 41.89 81.36 41.08 164.38 75 42.82 87.79 48.54 174.15 76 43.80 94.69 46.16 184.65 77 44.75 102.19 48.95 195.89 78 45.67 110.31 51.99 207.97 79 44.69 118.99 55.28 220.91 80 47.80 128.60 58.70 284.80 81 49.16 188.16 62.44 249.76 82 60.87 148.62 66.49 265.98 88 52.95 159.83 70.98 288.71 84 55.58 171.84 75.81 808.28 85 58.53 185.20 81.24 824.97 86 61.87 200.16 87.34 849.37 87 65.68 217.01 94.28 376.62 88 69.62 286.61 102.08 408.31 89 73.50 259.65 111.05 444.20 90 77.70 286.20 121.30 485.20 91 81.76 817.51 183.09 582.36 92 84.54 855.41 146.65 586.59 98 85.54 400.53 162.02 648.09 94 84.48 452.86 179.09 716.38 95 74.38 519.05 197.57 790.28 96 62.88 583.24 215.21 860.88 97 89.04 604.04 231.08 924.11 98 186.84 581.40 255.91 1,028.65 99 961.54 820.51 1,282.05 For explanation, see page 196. 204 TABLE Showing the elements of which a Natural based on the Actuaries' Table of 1 Agb. Mortality Expense Gross Natural element . element. Premiums. Col. 1. Col. 3. Col. 3- 10 $6.50 $2.17 $ 8.67 11 6.53 2.18 8.71 12 6.55 2.19 8.74 18 6.59 2.20 8.79 14 6.63 2.21 8.84 15 6.68 2.23 8.91 16 B.73 2.24 8.97 17 6.79 2.26 9.06 18 6.86 8.29 9.16 19 6.93 2.31 9.24 20 7.01 2.84 9.36 21 7.09 2.86 9.46 22 7.18 2.89 9.57 28 7.27 2.43 9.69 24 7.87 2.46 9.83 25 7.47 2.49 9.96 26 7.58 2. 58 10.11 27 7.70 2.57 10.27 28 7.83 2.61 10.44 29 7.96 2.65 10.61 80 8.10 2.70 10.80 81 8.25 2 76 11.00 82 8.41 2.80 11.21 83 8.58 2.86 11.44 84 8.75 2.92 11.67 85 8.93 2.98 11.91 86 9.12 8.04 12.16 87 9.81 8.10 12.41 88 9.53 8.18 12.71 89 9.74 8.25 12.99 40 9.95 8. 32 13. 2« 41 10.20 3.40 13.60 42 10.48 8.49 13.97 43 10.82 8.61 14.43 44 11.25 3.74 15.00 45 11.74 8.91 15.65 46 12.35 4.12 . 16.47 47 13.00 4.33 17.33 48 13.71 4.57 18.28 40 14.48 4.88 19.31 50 15.33 5.11 20.44 51 16.25 5.42 21.67 52 17.26 5.75 23.01 53 18.36 6.12 24.48 54 19.53 6.51 26.04 For explanation, see page 197. 205 No. K. Annual Life Premium for $l,000 is composed. Mortality, and 4 per cent, interest. Age, Mortality element. Coi. I. 55 $20.83 56 22.24 57 23.73 58 25.37 59 27.16 60 29.17 61 31.36 62 33.77 63 36.38 64 39.26 65 42.39 66 45.78 67 49.49 68 53.49 69 57.78 70 62.44 71 67.46 72 72.89 73 78.73 74 85.07 75 91.89 76 99.21 77 107.18 78 115.81 79 125.06 80 135.01 81 145.61 82 156.92 83 169.15 84 182.38 85 197.21 86 213.92 87 232.92 88 255. 07 89 281.14 90 311.28 91 347.10 92 389.68 93 439.64 94 496.45 95 561.80 96 623.70 97 665.68 98 721 . 15 99 961.54 Expense element. Col. 3. $6.91 7.41 7.91 8.46 9.05 9.72 10.45 11.26 12.13 13.09 14.13 15.26 16.49 17.83 19.26 20.81 22.49 24.29 26.24 28.36 80.63 33.07 85.73 88.60 41.69 45.00 46.40 52.31 56.38 60.79 65.74 71.31 77.64 85.02 93.71 103.76 115.70 129.89 146.55 165.48 187.27 207.90 221.89 240.38 320.51 Gross Natural Premium . Coi. 3. 27.77 29.65 31.64 33.83 36 21 38.89 41.81 45.03 48.51 52.35 56.52 61.04 65.98 71.32 77.04 83.25 89.95 97.18 104.97 113.43 122.52 132.28 142.91 154.41 166.75 180.01 192.01 209.23 225.53 243.17 262.95 285.23 310.56 340.09 874.85 415.04 462.80 519.57 586.19 661.93 749.07 831.60 887.57 961.53 1,282.05 For explanation, see page 197. 206 TABLE Showing how much SI.OO per annum from I to Ybars. 3 „ 4 „ 5 „ 6 Per cent. Per cent Per cent. Per cent. Col I. Col. a. Col. 3. Col. 4- 1 $1.08 $1.04 $1.05 $1.06 2 2.09 2.12 2.15 2.18 8 3.18 8.24 8.80 8.36 4 4.80 4.40 4.50 4.60 5 5.45 5.60 5.75 5.90 6 6.63 6.84 7.05 7.26 7 7.84 8.12 8.40 8.68 8 9.08 9.44 9.80 10.16 9 10.35 10.80 11.25 11.70 10 11.65 12.20 12.75 13.80 11 12.98 13.64 14.80 14.96 12 14 34 15.12 15.90 16.68 13 15.73 16.64 17.55 18.46 14 17.15 18.20 19.25 20.80 15 18.60 19.80 21.00 22.20 16 20.08 21.44 22.80 24.16 17 21.59 23.12 24.65 26.18 18 23.13 24.84 26.55 28.26 19 24.70 26.60 28 50 80.40 20 26.30 28.40 80.50 82.60 21 27.93 80.24 82.55 34.86 22 29.59 82.12 84.65 87.18 28 31.28 84.04 86.80 39.56 24 33.00 86.00 89.00 42.00 25 84.75 88.00 41.25 44.50 26 36.53 40 04 43.55 47.06 27 38.34 42.12 45.90 49.68 28 40.18 44.24 48.80 52.36 29 42.05 46.40 50.75 55.10 30 48.95 48.60 53.25 57.90 31 45.88 50.84 55.80 60.76 32 47.84 53.12 58.40 68.68 83 49.83 55.44 61.05 66.66 34 51.85 57.80 68.75 69.70 35 53 90 60.20 66.50 72.80 36 55.98 62.64 69.30 75.96 37 58.09 65.12 72.15 79.18 38 60.23 67.64 75.05 82.46 39 63.40 70.20 78.00 85.80 40 64.60 72.80 81.00 89.20 41 66.83 75.44 84.05 92.66 42 69.09 78.12 87.15 96.18 43 71.38 80.84 90.80 99.76 44 73.70 83.60 98.50 108.40 45 76.05 86.40 96.75 107.10 46 78.43 89.24 100.05 110.86 47 80.84 92.12 103.40 114.68 48 83.28 95.04 106.80 118 56 49 85.75 98.00 110.25 122.50 50 88.25 101.00 118.75 126.50 For explanation, see page 197. 207 No. 4. will amount to, at Simple Interest, in 50 Years. 7 1 8 „ 9 « ^o Years. Per cent. Per cent. Per cent. Per cent. CoLs Col. 6. CoL. f. Col. 8. $1.07 $1.08 $1.09 $1.10 1 2.21 2.24 2 27 2.80 2 8.42 8.48 8.54 8.60 8 4.70 4.80 4.90 5.00 4 6.05 6.20 6.85 6.50 5 7.47 7.68 7.89 8.10 6 8.96 9.24 9.52 9.80 7 10.52 10.88 11.24 11.60 8 12.15 12.60 13.05 18.50 9 13.85 14.40 14.95 15.50 10 15.62 16.28 16.94 17.60 11 17.46 18.24 19.02 19.80 12 19.87 20.28 21.19 22.10 13 21.85 22.40 28.45 24.50 14 28.40 24.60 25.80 27.00 15 25.52 26.88 28.24 29.60 16 27.71 29.24 80.77 82.80 17 29.97 81.68 83.89 85.10 18 82.80 84.20 86.10 88.00 19 84.70 86.80 88.90 41.00 20 87.17 89.48 41.79 44.10 21 89.71 42.24 44.77 47.80 22 42.82 45.08 47.84 50.60 28 45.00 48.00 51.00 64.00 24 47.75 51.00 54.25 67.50 25 50.57 54.08 57.59 61.10 26 58.46 57.24 61.02 64.80 27 56.42 60.48 64.54 68.60 28 59.45 63.80 68.15 72.50 29 62.55 67.20 71.85 76.50 30 65.72 70.68 75.64 80.60 31 68.96 74.24 79.52 84.80 82 72.27 77.88 83.49 89.10 33 75.65 81.60 87.55 93.50 34 79.10 85.40 91.70 98.00 85 82.62 89.28 95.94 102.60 36 86.21 93.24 100.27 107.80 37 89.87 97.28 104.69 112.10 38 93.60 101.40 109.20 117.00 39 97.40 .105.60 113.80 122.00 40 101.27 109.88 118.49 127.10 41 105.21 114.24 128.27 132.30 42 109.22 118.68 128.14 137.60 48 118.30 123.20 133.10 143.00 44 117.45 127.80 188.15 148.50 45 121.67 132.48 148.29 154.10 46 125.96 137.24 148.52 159.80 47 180.32 142.08 153.84 165.60 48 184.75 147.00 159.25 171.50 49 189.25 152.00 164.75 177.50 50 For explanation, see page 197. 208 TABLE Showing how much $l.00 will amount Vf _ » ^_ 3 3H 4 r."^^ „ 5 Ykaks. Per cent. Per cent. Per cent. Col. 3. Per cent. Per cent Col. I. Col. ». C0L4. Col. 5. 1 $1,080 $1,035 $1,040 $1,045 $1,050 2 1.061 1.071 1.082 1.092 1.103 3 1.098 1.109 1.125 1.141 1.158 4 1.126 1.148 1.170 1.193 1.216 5 1.159 1.188 1.217 1.246 1.276 6 1.194 1.229 1.265 1.302 1.840 7 1.280 1.272 1.816 1.861 1.407 8 1.267 1.817 1.869 1.422 1.478 9 1.305 1.863 1.428 1.486 1.551 10 1344 1.411 1.480 1.558 1.629 11 1.384 1.460 1.540 1.628 1.710 12 1.426 1.511 1.601 1.696 1.796 18 1.469 1.564 1.665 1.772 1.886 14 1.513 1.619 1.782 1.852 1.980 15 1.558 1.675 1.801 1.985 2.079 16 1.605 1.734 1.878 2.022 2.183 17 1.653 1.795 1.948 2.118 2.292 18 1.702 1.858 2.026 2.209 2.407 19 1.754 1.923 2.107 2.808 2.527 20 1.806 1.990 2.191 2.412 2.653 21 1.860 2.059 2.279 2.520 2.786 22 1.916 2.132 2.370 2.634 2.925 23 1.974 2.206 2.465 2.752 8.072 34 2.033 2.288 2.563 2.876 8.225 25 2.094 2.368 2.666 8.005 3.386 26 2.157 2.446 2.773 3.141 8.556 27 2.221 2.582 2.883 8.282 3.784 28 2.288 2.620 2.999 8.480 8.920 29 2.a57 2.712 3.119 8.584 4.116 30 2.427 2.807 8.248 8.745 4.822 31 2.500 2.905 8.878 8.914 4.538 32 2.575 8.007 3.508 4.090 4765 33 2.652 3.112 3.648 4.274 5.003 34 2.732 3.221 3.794 4.466 5.253 35 2.814 3.384 8.946 4.667 5.516 36 2.898 3.450 4.104 4.877 5.792 37 2.985 8.571 4.268 5.097 6.081 38 8.075 3.696 4.489 5.826 6.386 39 3.167 3.825 4.616 5.566 6.705 40 3.262 3.959 4.801 5.816 7.040 41 3.360 4.098 4.998 6.078 7.393 42 3.461 4.241 5.193 6.852 7.762 43 3.565 4.390 5.401 6.687 8.150 44 3.672 4 543 5-617 6.986 8.557 45 3.782 4.702 5.841 ' 7.248 8.985 46 8.895 4.867 6.075 7.574 9.434 47 4.012 5.037 6.318 7.915 9.906 48 4.132 5.214 6.571 8.272 10.401 49 4.256 5.396 6.883 8.644 10.921 50 4.384 5.585 7.107 9.033 11.467 For explanation, see page 197. No. 5. to compounded annually, for i to 50 years. 6 frrctDL 7 P„«c«., P,r°«n. PJS... Ykms. $1,060 » 1.070 «; i.m t 1-°0B0 t 1.100 __ i.ru 1.145 1,180 1,188 1,310 3 1.191 1.32.'") 1.260 1,395 1.331 3 1.311 1,361 1,412 1.464 4 LS38 1.403 1.469 1,.539 1,611 5 1.41U 1.501 1,587 1,677 1.773 6 l.IiOl 1.606 1.714 1,838 1-949 7 ).5»t 1,718 1,851 1,998 2.144 8 1.6U0 1.839 1.999 2,172 2.858 9 1.791 1.967 3.159 3.367 2.594 10 i.ess 3.105 2,332 3,580 2.858 11 3.013 3,253 3.519 3 813 3.138 13 3.133 3,410 3.730 3,066 3.452 13 2.381 3.579 3,937 3,342 3.798 14 3,397 2,7.^9 3,173 3,648 4.177 15 2.540 3.933 3.436 3,970 4.595 16 3.693 3.159 3,700 4,328 5.055 17 2.854 3-380 3,990 4,717 5.560 18 3.086 3.617 4.316 6,143 6.116 19 8.207 3.870 4.661 5.604 6-738 20 8.400 4,141 5.034 6.109 7.400 81 8.604 4,430 5,437 6.659 8.140 33 8.830 4,741 5.873 7,268 8.954 4019 S,073 6,341 7,911 9.M0 2i 4.202 5.437 6.8J9 8.633 10.835 25 4.549 5.807 7.396 9.399 11918 26 4.823 6.314 7.988 10.345 13.110 37 6.113 6.649 8.637 11.167 14.431 28 5.418 7.114 9,317 13.172 15,863 29 5.744 7.613 10.063 13.368 17,449 30 8.088 8,145 10.868 14,463 19,194 31 6.453 8,715 11,737 15.783 21.114 83 6.841 9,835 13.676 17.183 33.325 33 7.251 9,978 13.690 18.728 2-5.548 34 7.686 10.677 14.78.5 30,414 38.103 35 8.147 11.434 15,968 33,251 80.913 36 8.6S6 13,334 17.246 34,254 34.004 37 9.154 13,079 16.625 26,437 37.4U4 38 9.704 13.895 30.115 28,816 41,145 39 10,286 14,075 31725 81,409 45.3.^19 40 lo.ooa 16,033 23.463 34.386 49.785 41 11.557 17,144 Ki,340 37,318 54,764 43 13.351 18,344 37,367 40,676 60,340 43 13,986 19.629 20.550 44,337 66,264 44 1S.705 21.003 31.930 48.337 72,891 45 14.501 23,473 34.474 52.677 80,180 46 15.466 24.046 37.283 57.418 88.198 47 1&3»4 25.729 40.211 63.585 97.017 48 17.378 37.530 48.4S7 68.319 106,719 49 18.430 39.457 46,903 74,358 117.391 50 For explanation, see pB({e 197. TABL£ Showing how much $|.00 per annum annually for " 3 3H p f™, »*** Perinl Per ceni. Per cent. Per CCBI. i i.aiii 1.035 I.IMO 1.045 1,050 2 L'.OUI 2,1U6 2.132 S.1S7 3.153 3 3-lW 3.215 3 247 3.278 aaio 4 4.3(>H 4.;*3 4.416 4,471 4.528 n 5.46H S..WO 6.633 6,717 5.803 e e.aaa 6 77H 6.898 7.019 7143 7.B92 8.052 8.214 8.880 8.54H 8 B.lSB 9.3flB 9.583 9.803 10.027 9 10.454 10.731 11.006 11.368 11.578 10 11.808 12.143 12.486 12.841 13.207 11 13 ilfi 13.603 14,026 14.464 14, Bi: 12 14-618 15.113 15,027 16.160 16.713 13 10.(186 16.677 17,392 18.5BB 14 IT-nilM 18.298 19,034 19.784 ao.57M 18.157 19.971 20.825 21.719 32.858 16 2(1762 21.705 22.098 23,743 34,810 17 22.414 a3.na> 24.645 25,855 27.133 IP 24.117 35.357 26.671 28.064 39.539 IS 23.870 37,280 28.778 30,371 32.0H» ao 27.677 39.370 30.9«B 83.783 34.719 21 29.587 31.339 ;13.248 85,303 37.505 33 SllVl 33.460 35-018 87937 40.431 33.437 35.087 3B,083 40.689 43,502 24 Hrt.im 8T.B50 40.646 43.56S 46,727 3r. 87. -.53 40.313 43.312 48 571 50.114 20 3H.T11) 42.759 46,084 40.711 53,66U 27 41.831 45.2B1 48.968 52.1193 57.403 28 44.219 47.B11 51.066 56.423 61.323 2U 48.575 50,623 55.085 60.007 65.439 30 4K.003 53 430 58.338 83.752 69.761 31 r,-\.rm 5U.335 61.702 87,666 74299 33 51.078 5^.341 ft5.210 71.756 79.064 3:1 B(i.7;« 62.458 68.858 70.aTO S4.067 34 59,463 05.074 72.653 80.497 H8.320 8.-1 (12-270 69,008 76,598 85.164 »4.836 3a ft'i,174 73.418 80,703 90.041 100.628 37 (ia.i59 70.030 84.970 95,138 106.710 38 71-2;t4 7B,725 89.400 100.404 113 095 39 74.401 83.550 94.026 106.030 119.800 40 77.063 87.510 98,827 111.847 136.810 41 81.028 91.607 103.820 117,825 134.233 43 84.484 95.849 109.012 194.276 141.993 43 88.048 100.238 114.418 130.914 150.143 44 ltl.72n 104.783 120.039 137,850 158.700 45 B.').503 100.484 125.E71 145,088 167.685 46 99.397 114.351 131.043 153 073 177.119 47 103.408 119.388 138.263 160.588 187.02.^ 49 107.541 134.603 144.B34 168.859 197.427 49 111.797 139.998 161.687 177.503 308, S18 50 116.182 135,583 159.274 188.536 219.815 For explanation, sec page 196. 211 No. i B. will amount to, compounded, 1 to 50 years. 6 Per cent. Per cent. „ 8 Per cent. „ 9 Per cent. Per cent. Ybaks. Col. 6. Col. 7. Col. 8. Col. 9. Col. zo. 1.060 1.070 1.080 1.090 1.100 1 2 184 2.215 2.246 2.278 2.810 2 4J.375 3.440 8.506 3.578 8.641 3 4.637 4.751 4.867 4.985 5.105 4 5.975 6.153 6.386 6,523 6.716 5 7.894 7.654 7.928 8.200 8.487 6 8.898 9.260 9.687 10.029 10.486 7 10.491 10.978 11.488 12.021 12.580 8 12.181 12.816 18.487 14.198 14.987 9 18.972 14.784 15.646 16.560 17.531 10 15.870 16.889 17.977 19.141 20.384 11 17.882 19.141 20.495 21.953 23.523 12 20.015 21.551 23.215 25.019 26.975 13 22.276 24.129 26. 152 28.361 80 778 14 24.678 26.888 29.824 82.003 84 950 15 27.213 29.840 , 82.750 35.974 39.545 16 29.906 82.999 86.450 40.801 44.599 17 32.760 86.879 40.446 45.019 50.159 18 35.786 39.996 44.762 50.160 56.275 19 38.998 43.865 49.423 55.765 63.008 20 42.392 48.006 54.457 61873 70.403 21 45.996 52.436 59.898 68.582 78.543 22 49.816 57.17r 65.765 75.790 87.497 28 53.^65 62.249 72.106 88.701 97.847 24 58.156 67.677 78.954 92.324 108.182 25 62.706 78.484 86.851 101.728 120.100 26 67.528 79.698 94.889 111.968 133.210 27 72.640 86.347 102.966 128.135 147.631 28- 78.058 93.461 112.288 185.808 163.494 29 ^.802 101.078 122.846 148.575 180 943 30 89.890 109.218 183.214 163.087 200.188 81 96.343 117.933 144.951 178.800 221.252 32 108.184 127.259 157.627 195.982 244.477 83 110.4a5 187.287 171.317 214.711 270.024 84 118.121 147.914 186.102 285 125 298.127 85 126.268 159.837 202.070 257.376 829.040 36 181.904 171.561 219.816 281.680 86S.048 87 144.059 184.640 237.941 808.067 400.448 88 158 762 198.635 258.057 886.882 441.598 39 164.048 213.610 279.781 868.292 486.852 40 174.951 229.682 308.244 402.528 586.687 41 186 508 246.777 328.583 489.846 591.401 42 198.758 265.121 355.950 480.522 651.641 43 211.744 284.749 3a5.506 524.859 717.905 44 225.508 805.752 417.426 573.186 790. ."95 45 240.099 828.224 451.900 625.863 870.975 46 255.565 852.270 489.182 688.280 959.172 47 271.958 877.999 529.848 745.866 1,056.190 48 289.336 405.529 572.770 814.084 1,162.909 49 307.756 484.986 619.672 888.441 1,280.299 50 For explanation, see page 198. TABI Showing how much $l.OO per annum, 1 annually i Y«AM. p.,?..,. ,.??„. Pet cool. ,.f?.... P=rc CdL.. CnL, Col. 1. Col. t 11 12.18 12.57 18.89 13.42 12 18.88 18.00 13 51 14.02 13 12.90 18.46 14.ft5 14.85 14 18.29 18.93 14.61 15.31 15 18.6ft 14.43 15,19 18.00 16 14.10 14.93 15.80 16.72 17 14.62 15.45 16.43 17.48 18 1496 15.90 17.09 18.26 19 1G.41 16.55 17.77 19.08 30 20 15.87 17.18 18.48 19.94 31 SI 16.84 17.73 19.23 30.84 82 23 16.84 IB. 35 19.99 ai.78 23 28 17.34 18.90 20.79 as.76 25 24 17.86 19.65 21,63 28.78 26 25 18.40 30.84 22.49 24.85 27 26 18.95 21.05 33. S9 85.9? 28 27 19.52 21.79 24.38 27.14 30 20.10 28.55 25-20 28.86 81 29 20.71 23.84 36.31 39.64 33 30 31.JV 34.18 27.36 30.97 ST 81 21.»7 35,01 38.45 33.36 8 23.63 35,88 39,59 83.82 I 83 38.30 38.79 30.78 85.84 34 24.00 37.73 33.00 36 93 35 24.73 38.69 33.39 38.59 36 25.46 29.70 84.62 40,33 87 26.38 80.74 30.00 43- 14 27.03 31.81 37.44 44-04 27.82 33.98 38.94 46,02 40 28.67 34-08 40,50 48.09 41 29.53 35.27 42.12 50.3B 43 30. U 36.51 43.80 53,.53 43 81.33 87.78 4'-.. 56 44 32.36 39.11 47,88 57 3.5 45 83.33 40.48 49.27 59,98 46 84.23 41.89 51.24 62,63 47 3.1.25 43.86 .53.29 65,45 48 36.01 44.88 55.48 68.39 49 37.40 46.45 57,64 71,47 SO 38.53 4&07 59.95 74,69 For explanation, see page 198, No. 7. 10 years, will amount to compounded 11 to 50 years. 213 „ 6 Per cent Per cent. „ 8 Per cent. „ 9 Per cent. Per cent. Years. Col. 6. Col. 7. Col. 8. Col. 9. Col. zo. 14.81 15.82 16.90 18.05 19 28 11 15.70 16.93 18.25 19.67 21.21 12 16.64 18.11 19.71 21.4^ 28.33 13 17.64 19.38 21.29 23.38 25.67 14 18.70 20.74 22.99 25.48 28.23 15 19.82 22.19 24.83 27.77 31.06 16 21.01 23.74 26.81 30.27 34.16 17 22.17 25.40 28.96 33.00 87.58 18 23.61 27.18- 81.28 85.97 41.84 19 25.02 29.08 33.78 39.20 45.47 20 26.52 32.75 36.48 42.73 50.02 21 28.11 33.30 89.40 46.58 55.01 22 29.80 a5.63 42.55 50.77 60.52 28 31.59 38.12 45.95 55.34 66.57 24 83.48 40.79 49.63 60.32 73.23 25 ^.98 43.64 53.60 65.74 80.56 26 37.62 46.70 57.89 71.67 88.61 27 39 88 49.97 62.52 78.11 97.47 28 42.27 53.46 67.52 85.15 107.20 29 44.81 57.21 72.92 92.80 117.94 30 47.50 61.21 78.76 101.16 129.73 81 50.35 65.50 85.06 110.27 142.70 32 53.87 70.08 91.86 120.19 156.90 38 56.57 74.99 99.21 131.01 172.68 34 59.86 80.24 107.15 142.80 189.95 35 «8.56 85.85 115.72 155.65 208.94 86 67.38 91.86 124.99 169.66 229.83 37 71.42 98.29 184.98 184.93 252.80 88 75.70 105.17 145.77 201.54 278.05 39 «0.25 112.54 157.44 219.72 305.9a 40 85.17 120.41 170.03 239.46 836.49 41 90.16 128.84 183.63 260.99 370.08 42 95.57 187.86 198 32 284.51 407.16 43 101.31 147.51 214.19 810.14 447.88 44 107.39 157.84 281.32 838.06 492.63 45 113.83 168.89 249.83 368.47 541.71 46 120.66 180.71 269.82 401.59 596.06 47 127.90 193.86 291.40 437.79 655.67 48 135.57 206.89 314.71 477.20 721 28 49 143.71 221.38 339.89 520.14 793.45 50 For explanation, see page 198. 214 Ybars. 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 TABLE Showing how much $|.00 per annum annually for I6 „ 3 Per cent. Col. I. 19.73 20.32 20.93 21.56 22.21 22.88 23.56 24.27 25.00 25.74 26.52 27.31 28.13 28.98 29 85 30.74 31.66 32.61 33.59 34.60 35.64 36.71 37.81 38.94 40.11 41.31 42.55 43.83 45.15 46.50 47.89 49.33 50.81 52.34 53.90 Per cent. CoL V. 20.67 21.39 22.14 22.92 28.72 24.55 25.41 26.30 27.27 28.16 29.06 30.18 31.23 32.33 33.46 34.63 35.84 37.10 38.39 39.74 4 Per cent. 4^ Per cent. Col. 3. 21.66 22.52 23.43 24.36 25.34 26.35 27.40 28.50 29.64 30.82 32.06 33.34 34.67 36.06 37.50 39.00 40.56 42.19 43.87 45.63 41.13 47 45 41.97 49.35 44.06 51.33 45.60 53.38 47.20 55.51 48 05 57.74 50.56 60.05 52.33 62.45 54.16 64.95 56.05 67.54 58.02 70.24 60.05 78.05 62.14 75.98 64.32 79.01 66.58 82.18 Col. 4. 22.70 23.71 24.79 25.90 27.07 28.29 29 55 30.89 32.28 33.73 35.25 36.88 38.50 40.22 42.03 43.93 45.90 47.97 50.12 52.39 54.73 57.20 59.78 62.47 65.28 68.21 71.29 74.50 77.84 81.34 85.00 88.80 92.82 97.00 101.38 „ 5 Per cent. Col. 5. 23.79 24.98 26.23 27.54 28.72 30.36 81.88 83.48 85.15 86.91 88.75 40.69 42.72 44.87 47.11 49.46 51.93 54.53 57.26 60.12 63.12 66.28 69.59 73.07 76.73 80.56 84.59 88.82 93.36 97.92 102.82 107.96 118.36 119.03 124.98 For explanation, see page 198. 215 No. 8. for 16 years will amount to, compounded to 50 years. „ 6 Per cent. Per cent. „ 8 Per cent. „ 9 Per cent. Per cent. • Ybars. Col. 6. Col. 7. Col. 8. Col 9. Col. xo. 26.15 28.77 31.67 34.88 38.44 16 27.72 30.78 34.20 38.02 42.29 17 29.39 32.94 87.04 41.44 46.52 18 31.15 35.24 39.90 45.18 51.17 19 33.02 37.71 43.08 49.24 56.27 20 35.00 40.36 46.53 53.67 61.92 21 37.10 43.18 50.26 58.50 68.11 22 39.32 46.20 54.28 63.77 74.92 28 41.68 49.43 58.62 69.51 82.41 24 44.18 52.89 63.31 75.75 90.65 26 46.84 56.60 68.87 82.57 99.71 26 49.65 60.56 73.84 90.02 109.67 27 52.62 64.79 79.75 98.12 120.66 28 55.78 69.33 86.18 106.95 132.72 29 59.13 74.18 93.02 116.57 145.98 80 62.68 79.38 100.46 127.05 160.59 81 66.44 84.93 108.50 138.50 176.64 82 70.42 90.88 117.18 150.96 194.32 88 74.65 97.24 126.55 164.55 213.74 84 79.13 104.05 136.68 179.35 286.11 86 83.88- 111.33 147.61 195.50 258.68 86 88.91 119.12 159.42 218.10 284.49 37 94.24 127.46 172.18 232.28 312.94 88 99.90 136.39 ia5.95 258.18 344.24 89 10589 145.93 200.83 275.97 378.67 40 112.25 156.05 216.89 800.80 416.53 41 118.98 167.08 234.25 327.88 458.19 42 126.12 178.77 252.98 357.88 503.98 48 133.69 191.29 273.22 389.48 554.30 44 141.71 204.68 295.08 424.61 609.84 46 150.21 219.01 318 69 462.77 670.68 46 159.32 234.34 344.18 504.37 737.79 47 168.77 250.74 371.71 549.82 811.71 48 178.90 268.29 401.45 599.86 892.88 49 189.64 287.07 433.57 653.32 982.09 50 For explanation, see page 198. TAB Showing how much $|.00 per am annually fc *s. „ 3 Per cent. »3H Per cent. „ 4 Per cent. Per cent Per Col. I. Col. SI. Col. 3. Col. 4. ( 1 24 25 28.51 29.86 80.24 81.15 82.09 30.29 31.85 32.45 33.59 84.76 32.21 83.50 84.84 86.23 87.68 34.26 35.80 37.41 39.09 40.85 26 27 28 29 80 83.05 84.04 85.06 86.11 87.19 35.99 37.24 88.54 89.89 41.29 39.18 40.75 42.88 44.08 45.84 42.69 44.61 46.62 48.72 50.91 81 32 33 34 35 38.81 89.46 40.64 41.86 48.12 42.78 44.23 45.78 47.88 49.04 47.68 49.58 51.56 58.68 55.77 53.20 55.60 58.10 60.71 63.45 86 37 38 39 40 44.41 45.74 47.12 48.58 49.99 50.75 52.58 54.87 56.27 58.24 58.01 60.82 68.67 65.25 67.86 66.80 69.28 72.40 75.66 79.06 / 41 42 48 44 45 51.49 58.03 55.02 56.26 57.95 60.28 62.89 64.57 66.88 69.17 70.57 78.89 76.83 79.88 82.56 82.62 86.84 90.23 94.28 98.53 • 46 47 48 49 50 59.69 61.48 68.82 65.22 67.18 71.59 74.10 76.69 79.88 82.15 85.86 89.80 92.88 96.58 100.45 102.96 107.49 112.44 117.49 122.78 For explanation, see page 19f No. 9. for 20 years will amount to, compounded to 60 years. 217 „ 6 Per cent. Col. 6. 41.83 43.81 46.44 49.23 52.18 55 31 58.63 63.15 65.88 69.83 74.02 78.46 83.17 88.16 93.45 99.05 104.99 111.30 117.98 125.05 132.56 140.51 148.94 157.88 167.35 177.39 188.03 199.32 511.28 223.95 7 Per cent. Col. 7. 46.94 50.22 53.73 57.50 61.53 65.83 70.44 75.37 80.65 86.29 92.33 98.79 105.71 113.11 120.62 129.50 138 56 148.26 159.55 169.75 181.63 194.34 207.94 222.50 238.07 254.74 272.57 291.65 312.07 838.92 8 Per cent Col. 8. 53.38 57.65 62.26 67.24 72.62 78.43 84.70 91.48 98.80 106.70 115.13 124.45 184.41 145.16 156.78 169.82 182 86 197.49 218.29 230.86 248.79 268.69 290.19 318.40 238.47 865.55 394.80 426.38 460.49 497.83 „ 9 Per cent. Per cent. Col. 9. 60.78 66.25 72.22 78.72 85.80 98.52 101. t>4 111.08 121.11 181.99 148.87 156.85 170.96 186.85 208.12 221.89 241.88 268.04 286.72 812.60 840.65 871.81 404.78 441.16 480.86 524.18 571.31 622.72 678.76 739.87 Col. zo. 69.30 76.28 83.86 92.24 101.47 111.62 122.77 135.05 148.55 168.41 179.75 197.70 217.48 289.25 263.16 289.50 818.45 350.29 885.82 428.85 466.22 512.84 564.12 620.56 682.61 750.86 825.96 908.50 999.41 1099.86 Years. 21 22 23 24 25 26 27 28 29 80 81 82 88 34 85 86 87 88 89 40 41 42 48 44 45 46 47 48 49 50 For explanation, see page 198. 218 TABLE Showing the present value of $l.OO due 50, in Years. i 3 3M 4 A% „ 5 1 Per cent. Per cent. Per cent. Col. 3. Per cent. Per cent Col. I. Col. V. Col. 4. Col. 5. 1 .9709 .9662 .9615 .9569 .9524 2 .9426 .9335 .9246 1 .9157 .9070 3 .9151 .9019 .8890 ' .8763 .8638 4 .8885 .8714 .8548 .8386 .8227 5 .8626 .8420 .8219 .8025 .7835 6 .8375 .8135 .7903 1 .7679 .7462 7 • .8181 .7860 .7599 .r348 .7107 8 .7894 .7594 .7807 ' .7082 .6768 9 .7664 .7387 .7026 .6729 .6440 10 . .7441 .7089 .6756 .6489 .6139 11 .7224 .6849 .6496 .6162 .5847 12 .7014 .0618 .6246 .5897 .5568 13 .6810 .6394 .6006 .5643 .5303 14 .6611 .6178 .5775 .5400 .5051 15 .6419 .5969 .5553 .5167 .48ia 16 .6232 .5767 .5839 .4945 .4581 17 .6050 .5572 .5184 .4782 .4363 18 .5874 .5384 .4986 .4528 .4155 19 .5703 .5202 .4746 .4388 .3957 20 .5587 .5026 .4564 .4146 .3769 21 .5375 .4856 .4388 .3968 .3589 22 .5219 .4692 .4220 .8797 .3419 23 .5067 .4533 .4057 .8684 .325^ 24 .4919 .4380 .3901 .8477 .8101 25 .4776 .4231 .8751 .8827 .2953 26 .4637 .4088 .3607 .8184 .2812 27 .4502 .3950 .8468 .3047 .2678 28 4371 .3817 .3385 .2916 .2551 29 .4243 .3687 .3206 .2790 .2429 30 .4120 .3563 .8088 .2670 .2814 31 .4000 .3442 .2965 .2555 .2204 32 .3883 .3326 .2851 .2445 .2099 33 .3770 .3213 .2741 .2840 .1999 34 .3660 .3105 .2686 .2289 .1904 85 .3554 .3000 .2584 .2143 .1813 86 .3450 .2898 .2487 .2050 .1727 87 .3350 .2800 .2843 .1962 .1644 38 .3252 .2706 .2253 .1878 .1566 39 .3158 .2614 .2166 .1797 .1491 40 .3066 .2526 .2083 .1719 .1420 41 .2976 .2440 .2003 .1645 .1353 42 .2890 .2358 .1926 .1574 .1288 43 .2805 .2278 .1852 .1507 .1227 44 .2724 .2201 .1780 .1442 .1169 45 .2644 .2127 .1712 .1880 .1113 46 .2567 .2055 .1646 .1820 .1060 47 .2493 . 1985 .1583 .1263 .1009 48 .2420 .1918 .1522 .1209 .0961 49 . 2350 .1853 .1463 .1157 .0916 50 .2281 .1791 .1407 .1107 .0872 For explanation, see page 198. 219 No. 10. in any number of ye>ars, from I to elusive. „ 6 Per cent. Per ccn . „ 8 Per cent. „ 9 Per cent. Per cent. Years. Col. 6. Col. 7. CoL 8. Col. 9 . Col.xo. .9434 .9346 .9259 .9174 .9091 1 1 .8900 .8734 .8573 .8417 .8264 2 .8396 .8163 .7938 . .7722 .7518 3 .7921 .7629 .7850 .7084 .6880 4 .7473 .7130 .6806 .6499 .6209 5 .7050 .6663 .6302 .5963 .5645 6 .6651 .6228 .5835 .5470 .5182 7 .6274 .5820 .5408 .5019 .4665 8 .5919 .5489 .5002 .4604 .4241 9 .5584 .6083 .4632 .4224 .3856 10 .5268 .4751 .4289 .8875 .3505 11 .4970 .4440 .8971 .8556 .8186 12 .4688 .4150 .8678 .8262 .2897 18 4423 .8878 .3405 .2992 .2688 14 .4173 .3624 .3152 .2746 .2394 15 .3936 .3387 .2919 .2519 .2176 16 .3714 .3166 .2708 .2811 .1978 17 .3503 .2959 .2602 .2120 .1799 18 .3305 .2765 .2817 .1945 .1685 19 .3118 .2584 .2145 .1784 .1486 20 .2942 .2415 .1987 .1687 .1851 21 .2775 .2257 .1889 .1502 .1228 22 .3618 .2109 1703 .1878 .1117 23 .2470 .1971 .1677 .1264 .1015 24 .2330 .1842 .1460 .1160 .0928 25 .2198 .1722 .13.52 .1064 .0839 26 .2074 .1609 .1252 .0976 .0763 27 .1956 .1504 .1159 .0895 .0693 28 .1846 .1406 .1073 .0822 .0680 29 .1741 .1814 .0994 .0754 .0578 80 .1643 .1228 .0920 .0691 .0521 81 .1550 .1147 .0852 .0684 .0474 82 .1462 .1072 .0789 .0582 .0431 88 .1379 .1002 .0780 .0584 .0391 84 .1301 .0937 .0676 .0490 .0856 36 .1227 .0875 .0626 .0449 .0828 36 .1158 .0818 .0580 .0412 .0294 37 .1092 .0765 .0587 .0878 .0267 38 .1031 .0715 .0497 .0347 .0244 39 .0972 .0668 .0460 .0818 .0221 40 .0917 .0624 .0426 .0292 .0201 41 .0865 .0583 .0395 .0268' .0188 42 .0816 .0545 .0365 .0246 .0166 43 0770 .0509 ' .0338 .0226 .0151 44 .0727 .0476 1 .0313 .0207 .0137 45 .0685 .0445 i .0290 .0190 .0125 46 .0647 .0416 .0269 .0174 .0113 47 .0610 .0389 .0249 .0160 .0103 48 .0575 .0363 .0230 .0147 .0094 49 .0543 .0339 .0213 .0134 .0085 50 For explanation, see page 198. 220 TABLE Showing the present value of $l.OO per from I to Years. „ 3 Per cent. Per cent. „ 4 Per cent." Per cent. 5 Per cent. Col. r. Col. ». Col. 3. Col. 4. Col. 5. 1 .9709 .9662 0.9615 0.9569 0.9524 2 1.9185 1.8997 1.8861 1.8727 1.8594 8 2 8286 2.8016 2.7751 2.7490 2.7282 4 8.7171 8.6781 3.6299 8.5875 8.5460 5 4.5797 4.5151 4.4518 4.8900 4.3295 6 5.4172 5.8286 5.2421 5.1579 5.0757 7 6.2808 6.1145 6.0021 5.8927 5.7864 8 7.01 a7 6.8740 67827 6.5959 6.4632 9 7.7861 7.6077 7.4858 7.2688 7.1078 10 8.5802 8.8166 8.1109 7.9127 7.7217 11 9.2526 9.0016 8.7605 8.5289 8.8064 12 9.9540 9.6688 9.8851 9.1186 8.8633 18 10.6350 10.3027 9.9856 9.6829 9.3986 14 11.2961 10.9205 10.5681 10 2228 9.8986 15 11.9879 11.5174 11.1184 10.7895 10.3797 16 12.5611 12.0941 11.6528 11.2840 10.8878 17 18.1661 12.6513 12.1657 11.7072 11.2741 18 18.7585 13.1897 12.6598 12.1600 11.6896 19 14.3288 13.7098 18.1889 12.5983 12.0858 20 14.8775 14.2124 18.5908 13.0079 12.4622 21 15.4150 14.6980 14.0292 18.4047 12.8212 22 15.9869 15.1671 14.4511 13.7844 13.6080 23 16.4436 15.6204 14.8568 14.1478 1S.4886 24 16.9355 16.0584 15.2470 14.4955 18.7986 25 17.4131 16.4815 15.6221 14.8282 14.0939 26 17.8768 16.8904 15.9828 15.1466 14.8752 27 18.8270 17.2854 16.8296 15.4513 14.6480 28 18.7641 17.6670 16.6631 ' 15.7429 14.8981 29 19.1885 18.0358 16.9837 16.0219 15.1411 80 19.6004 18.3920 17.2920 16.2889 15 3725 81 20.0004 18.7863 17.5885 16.5444 15.5928 82 20.3888 19.0689 17.8736 16.7889 15.8027 88 20. -1 658 19.3902 18.1476 17.0229 16.0025 84 21 1318 19.7007 18.4112 17.2468 16.1929 85 21.4872 20.0007 18.6646 17.4610 16.3742 36 21.8823 20.2905 18.9083 17.6660 16.5469 37 22.1672 20.5705 19.1426 17.8622 16.7118 88 22.4925 20.8411 19.3679 18.0500 16.8679 39 22.8082 21.1025 19.5845 18.2297 17.0170 40 28.1148 21.8551 19.7928 18.4016 17.1591 41 23.4124 21.5991 19.9981 18.5661 17.2944 • 42 23.7014 21.8349 20.1856 18.7285 17.4282 43 28.9819 22.0627 20.3708 18.8742 17.54.59 44 24.2543 22.2828 20.548ft 20.7200 19.0184 17.6628 45 24.5187 22.4955 19.1568 17.7741 40 24.7754 22.7009 20.8847 19.2884 17.8801 47 25.0247 22.8994 21.0429 19.4147 17.9801 48 25.2667 23.0912 21.1951 19.5856 18.0772 49 25.5017 23.2766 21.3415 19.6518 18.1687 50 25.7298 23.4556 21.4852 19.7620 18.2559 For explanation, see page 198. No. II. annum due in any number of years, 50> inclusive. 221 ^ 6 Per cent. Per cent. ^ 8 Per cent. Per cent. i „ ^o 1 Per cent. Ybaks. Col. 6. Col. 7. Col. 8. Col. 9. Col. 10. 0.9434 0.9346 0.9259 0.9174 0.9091 1 1.8334 1.8080 1.7833 1.7591 1.7355 2 2.6730 2.6243 2.5771 2.5313 2.6849 3 3.4651 2.3872 3.3121 3.2397 8.1699 4 4.2124 4.1002 3.9927 3.8897 3.7908 5 4.9173 4.7665 4.6229 4.4859 4.3o43 6 5.5824 5.3893 5.2064 5.0380 4 8684 7 6.2098 5.9713 5.7466 5.5348 5.3349 8 6.8017 6.5152 6.2469 5.9952 5.7590 9 7.3601 7.0236 6.7101 6.4177 6,1446 10 7.8869 7.4987 7.1390 6.8052 6.4951 11 8.3838 7.9427 7.5361 7.1607 6.8137 12 8.8527 8.8577 7.9038 7.4869 7.1034 13 9.2950 8.7455 8.2442 7.7861 7.3677 14 9.7122 9.1079 8.5595 8.0607 7.6061 15 10. 1059 9.4466 8.8514 8.3125 7.8237 16 10.4773 9.7632 9.1216 8.5436 8.0216 17 10.8276 10.0591 9.3719 8.7556 8.2014 18 11.1501 10.8356 9.6086 8.9501 8.3649 19 11.4699 10.5940 9.8181 9.1285 8.5136 20 11.7641 10.8355 10.0168 9.2922 8.6487 21 12.0416 11.0612 10.2007 9.4424 8.7715 22 12.3034 11.2722 10.3711 9.5802 8.8832 23 12.5504 11.4693 10.5288 9.7066 8.9847 24 12.7834 11.6586 10.6748 9.8226 9.0770 25 13.0032 11.8258 10.8100 9.9290 9.1609 26 13.2105 11.9867 10.9352 10.0266 9.2372 27 13.4062 12.1371 11.0511 10.1161 9.3066 28 13.5907 12.2777 11.1584 10.1983 9.3696 29 13.7648 12.4090 11.2578 10.2736 9.4269 30 13.9291 12.5318 11.3498 10.3428 9.4790 31 14.0840 12.6466 11.4350 10.4062 9.5264 32 14.2302 12.7538 11.5139 10.4644 9.5694 83 14.3681 12.8540 11.5869 10.5178 9.6086 34 14.4982 12.9477 11.6546 10.5668 9.6442 35 14.6210 13.0852 11.7172 10.6117 9.6765 36 14.7368 13.1170 11.7752 10.6530 97059 37 14.8460 13.1935 11.8289 10.6908 9.7327 38 14.9491 13.2649 11.8786 10.7255 9.7570 39 15.0463 13.3317 11.9246 10.7573 9.7791 40 15. 1380 13.3941 11.9672 10.7866 9.7991 41 15.2245 13.4524 12.0067 10.8134 9.8174 42 . 15.3062 13.5070 12.0432 10.8379 9.8340 43 15.3832 13.5579 12.0771 10.8605 9.8491 44 15.4558 13.6055 12.1084 10.8812 9.8628 45 15.5244 13.6500 12.1374 10.9002 9.8753 46 15.5890 13.6916 12.1643 10.9176 9.8866 47 15.6500 13.7305 12.1891 10.9336 9.8969 48 15.7076 13.7668 12.2122 10.9482 9.9063 49 15.7619 13.8007 12.2335 10.9617 9.9148 50 For explanation, see page 198. TABLE Showing how much money most be invested I to 50 years, to YlAB. P.!:.,. Perceni P„f»,. «H P.,»™. I »70-e« W6-20 061 -M B56.95 052.38 2 478-26 474 79 471-34 467.05 464..58 8 314.11 31 1. at 308,03 3U5,W 302.11 i 232.07 3-.M.23 326.43 223.68 220.97 5 182.87 180.01 177.58 174.94 172,36 e 150.10 147.50 144.06 142.47 140.02 7 126.7(1 124.19 121.74 119.33 116,97 8 ioe.18 106.74 104.35 102.02 99, T3 e m.57 93.18 00,86 88.5S 86.37 10 8>-6fl 82.36 80.09 77.88 75.72 75.80 73.52 71.80 69.14 67.04 12 68 41 66.18 63.99 61.68 59.83 13 62.16 69.96 56.77 53.77 14 56.83 64.66 , !S2:67 50.55 48.59 ir, 52,30 60.07 48.02 48.04 44.14 16 48.16 46.07 41-06 42.12 40.36 44 61 43 56 40,58 38.68 36.86 IM 41.47 39.44 37.60 35.63 33.85 19 88,66 36 91 34.76 32 93 31.19 »] 38-13 84.17 33.39 30.60 28.80 ai «3,86 31.93 30,08 28.33 28.66 23 31.71 29.89 28.08 26,36 24. 7S 3a 3U.U1 28-04 26.26 24.58 32.99 24 3H-20 26-35 24.60 22.95 21.40 3fl 26.83 24-81 23.00 31.47 19.96 28 2.'".. 18 24.38 21.70 30.13 18.63 27 23,8-'. 23.08 30,42 18.87 17.42 38 22.83 30.87 19,24 17.73 16.31 211 21,48 19.76 18.16 16,67 15.28 3(i 20.41 18.78 17.14 15.69 14.34 31 19.43 18.07 16 31 14.78 13-46 ;!3 18.49 n.8r, 15.34 13.04 12.85 ai 17,(3 18-01 14.52 13.16 11.90 ■1+ 16-82 15.23 13.78 12.43 11.20 IH 18.06 14-46 13.06 11.74 10.55 80 iri.34 13.80 12.39 11.11 9.94 37 14,87 13-15 11.77 10.51 987 3H 14,04 13.54 11.19 996 8.84 se 13,44 31.97 10.64 9.43 s.sa 40 12.88 11,43 10.12 8.94 7-88 41 12.34 10,92 0.83 8.48 7.45 42 11.84 10,43 9.17 8.04 7.04 43 n.36 9.9M 8.74 7.84 6.88 44 lO.M 9.54 8.33 7.35 6.30 45 10.50 9.13 7.94 6.89 5.97 46 10.06 8.75 7.58 8.55 5.65 47 9.67 7.23 6.33 5.35 48 9.30 a 03 6.91 5.93 5.06 49 8.04 7.69 6.59 5.63 4.80 SO 6.61 7.38 6.30 5,86 4.56 For explanation, see page 109. 223 No. 12. every year, and compounded annually for amount to $l,000. 6 Per cent. Per cent. Per cent. ^ 9 Per cent. Per cent. ' Years. 1 Col. 6. CoL 7. Col. 8. Col. 9. Col. zo. 1 ""~ 943.40 934.58 925.93 917.43 i 909.09 1 457.96 ^ 451.49 445.16 438.96 , 482.90 2 296.33 290.71 285.22 279.87 ' 274.65 i 8 215.65 210.50 205.48 200.61 ! 195.88 i 4 167.35 162.51 157.83 153.80 148.91 5 135.25 180.65 126.22 121.95 117.88 6 112.39 107.99 108.77 99.72 95.82 7 95.32 91.09 87.05 83.19 79.49 8 S-4A0 78.03 74.14 70.46 66.95 9 71.57 67.64 6392 60.39 56.91 10 63.01 59.21 55.63 52.25 49.06 11 55.92 52.24 48.79 45.55 42.51 12 49.96 46.40 43.08 39.97 37.07 13 44.89 41.44 88.24 35.26 82.50 14 40.53 87.19 84.10 81.25 28.61 15 86.75 33.51 80.58 27.80 25.29 16 33.44 30.80 27.44 24.81 22.42 17 30.53 27.49 24.72 22.21 19.94 18 27.94 25.00 22.84 19.94 17.77 19 25.65 22.80 20.23 17.98 15.87 20 23.59 20.83 18.36 16.16 14.20 21 21.74 19.07 16.70 14.59 12.78 22 20.07 17.49 15.21 • 18.19 11.43 23 18.57 16.06 13.87 11.95 10.27 24 17.20 14.78 12.67 10.88 9.24 25 15.95 13.61 11.58 9.83 8.83 26 14.81 12.55 10.60 8.98 7.51 27 13.77 11.58 9.71 8.12 6.77 28 12.81 10.70 8.91 7.89 6.12 29 11.93 9.89 8.17 6.73 5.53 30 11.12 9.15 7.51 6.13 5.00 31 10.38 8.48 6.90 5.59 4.52 32 9.69 7.86 6.34 5.10 4.09 38 9.05 7.29 5.84 4.66 3.70 34 8.47 6.76 5.37 4.25 8.85 35 7.92 6.28 4.95 3.89 3.04 36 7.41 5.83 4.56 3.55 2.75 87 <5.74 5.42 4.21 8.25 2.50 88 6.51 5.03 8.87 2.97 2.26 89 6.10 4.68 8.57 2.72 2.05 40 5.72 4.85 3.80 2.48 1.86 41 5.36 4.05 8.04 2.27 1.69 42 5.03 8.77 2.81 2.08 1.58 43 4.72 8.51 2.59 1.91 1.39 44 4.43 8.27 2.40 1.74 1.26 45 4.17 8.05 2.21 1.60 1.15 40 3.92 2.84 2.04 1.46 1.04 47 3.68 2.65 1.89 1.34 .95 48 3.46 2.47 1.75 1.28 .86 49 . 3.25 2.30 161 1.13 .78 50 For explanation, see page 199. 004 TABLE Showing how much money must be invested nually, to amount to $l,000 Ykaks. U 12 13 14 15 16 17 18 19 20 21 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 „ 3 Per cent. I. Col $82.22 79.83 77.51 75.24 73.06 70.92 68.86 66. a5 64.91 63.02 61.18 59.39 57.67 55.99 54.35 52.78 51.24 49.75 48.29 46 93 45.52 44.20 42.91 41.07 40.40 39.23 38.13 87.00 a5.94 34.90 33.87 32.90 31.93 31.00 30.10 29.22 28.37 27.55 26.75 25.97 «3M Per cent. „ 4 Per cent. Per cent. „ 5 Per cent. Col. y. Coi. 3. Col. 4. Col s. 179.57 $77.01 174.52 , 172.11 76.88 74.05 71.81 68.68 74.29 71.20 68.24 65.41 71.77 68.46 65.80 63.29 69.84 65 82 62.49 59.88 67.00 68.80 59.80 56.50 64.78 60.86 57.22 53.81 62.58 58.52 54.76 51.25 60.43 56.27 52.40 49.81 58.39 54.11 50.14 46.49 56.41 52.02 47.99 44.27 54.50 50.02 45.92 42.16 52.65 48.10 48.94 40.16 60.98 46.25 42.05 38.24 49.16 44.47 40.24 36.42 47.50 42.76 88.51 84.69 45.89 41.12 86.85 33.04 44.34 89.58 85.26 31.46 42.84 38.01 33.74 29.96 41.89 ► 36.55 82.29 28.54 40.00 35.14 80.90 27.18 38.65 38.79 29.58 25.88 37.34 82.49 28.80 24.67 36.07 31.25 27.08 23 44 34.a5 80.04 25.91 22.34 33.67 28.89 24.79 21.80 32.53 27.78 23.78 20.80 31.41 26.71 22.71 19.82 30.36 25.68 21.73 18.40 29.34 24.69 20.79 17.58 28.35 28.74 19.90 16.69 27.40 22.88 19.04 15.90 26.47 21.95 18.22 15.18 25.57 21.11 17.44 14.42 24.71 20.80 16.68 13.73 23.87 19.52 15.97 13.08 23.06 18.77 15.80 12.45 22.29 18.04 14.62 11.86 21.53 17.35 14.00 11.29 20.80 16.68 18.40 10.75 For explanation, see page 199. No. 13. every year, for lo years, and compounded, an- in II to 50 years. p„".„. 7 8 Pe«™,. lO Ykab. tol. 7. 167.52 163,33 J59.16 155.40 ¥51.86 11 63.71 59.08 54.80 50-83 47.14 13 80.00 65.22 50.74 40.63 42.86 13 56. 6S 61.60 46.98 43.78 38.06 14 53,49 48.23 43.60 39.2-5 35.43 15 GO. 46 45.07 40.38 36.01 83.30 16 47.60 43.13 37.30 a'j,03 39.37 17 44.ei 89.40 34.53 30.31 36.60 18 43.86 SB.7fl 31.97 27.80 34.19 19 S9.97 34.39 39.81 35.51 31-09 20 87.70 33.14 37.41 23.87 i9.99 31 35.57 30.03 36.38 31.47 18.18 38 83.56 38.07 23.50 19.71 18.52 88 31.66 36.33 31.76 18.07 15.30 24 20.86 34.53 20.15 18.58 13,66 85 28 17 32.81 18.66 15.21 12.41 26 zfi.m 21.41 17.27 13.95 11.29 37 25.08 20.01 16.00 13.80 10.26 28 23.66 18.70 14.81 11.74 9.33 29 23.33 17,48 13,71 10.78 8.48 80 21.05 16.34 13.71 9.89 7.71 31 19.86 15.37 11.75 8.07 7.01 83 18.84 14.37 10.89 8.33 6.37 33 17.67 13.33 10.08 7.63 e.70 34 16.68 12,46 9.33 7.00 5.37 35 15,73 11.64 8.64 6.43 4.79 36 14.85 10.90 8.00 5.90 4.35 87 14.04 10,17 7.41 5.41 8.95 13.35 9.51 6.87 4.06 3.60 89 13.47 8.90 ex 4.55 8.39 40 11,75 8.30 5.88 4.18 3.97 41 11.10 7.70 5.44 3-83 3.70 42 10.46 7.SB .5.04 3-51 2.45 43 B.87 0.77 4.67 3.23 2.23 44 9.31 4.33 2.96 2.08 45 8.79 6.92 4.00 3.78 1.86 48 8.21 6.63 3.71 3.44 1.68 47 7.83 6.17 8.43 3.39 1.53 48 7.38 4.88 8.18 S.10 1.39 49 6.97 4.53 3.94 1.B2 1.37 50 For explanation, see page 199. TABLE Showing how much money muat be Invested nually, to amount to $l,000 Ykabs. P=!». jI^_^_ P„*=.,. P.f^. P„^™. 16 J50.67 148,38 »46,17 44.06' 42,03' IT 49,31 48-7.'5 44.40 43-15 40-03 18 47.78 45.15 42 69 40, M 38-16 Itt 46 40 43.64 41.05 38.61 36-31 90 45.06 43.16 89.47 36.95 34.58 SI 48.73 40,73 37.95 35.35 33.93 aa 43.44 89.36 36,49 33 83 31.37 23 41.31 88,03 35,09 83-38 39.87 S4 40.01 86,74 33,74 30.98 28.45 as 38.84 35,50 33,44 29,71 37.10 S6 37.71 34,30 31,19 28,37 25.81 27 36.61 33,14 39,99 27,15 34.58 28 35.55 33,02 38,84 25,98 33,41 29 34 51 30,93 37-78 34,86 32,29 80 83.51 30.89 36-66 28,79 31,38 81 33.53 38 88 35-64 32,77 30.28 S& 81.58 27.90 34,65 21,79 19.36 8S 80.06 36,96 23,70 20.85 18.34 84 39.77 36.05 32,79 19.95 17.47 85 28.90 35.17 31,92 19.09 16,63 86 . 28.06 34.81 21,07 18.27 15.84 87 27.28 3S.-19 i0,28 17.48 15.09 88 26.46 33.70 19,48 16,73 14.37 89 35.68 21.93 18,73 16,01 13.60 40 34.03 31.18 18,01 1S,33 13.03 41 24,21 20,47 17,33 14,66 12.41 42 23,50 19,78 16,66 14,08 11.82 43 22,82 19,11 16,0i 13,43 11.26 44 23.15 18.46 15,86 12,85 10.72 45 21.51 17.83 14,81 13,30 10.31 46 20,88 17,34 14.34 11-76 9,73 47 30 27 10.65 18,68 11.26 9.26 48 19,68 16,09 13,16 10,77 8,83 49 1911 15.55 13,66 10,31 8,40 80 18,55 16.03 12,17 9.86 8,00 227 No. 14. every year, for 15 years, and compounded, an- in 16 to 50 years. „ 6 Per cent. Col. 6. $38.24 86.07 84.03 82.10 30.29 28.57 26.96 25.43 23.99 22.63 21.35 20.14 19.00 17.93 16.91 15.59 15.05 14.20 13 39 12.64 11.25 11.24 10.61 10.01 9.44 8.91 8.40 7.93 7.48 7.05 6.66 6.29 6.93 5.59 5.27 „ 7 Per cent. Col. 7. 134.75 32.48 80.36 28.37 26.52 24.78 23. 16 21.65 20.23 18.91 17.67 16.51 15.29 14.42 13.48 12.60 11.77 11.00 10.29 9.62 8.98 8.39 7.85 7.38 6.85 6.40 5.99 5.59 5.23 4.86 4.57 4.27 399 3.73 3.49 „ 8 Per cent. Col. 8. $31.58 29.24 27.07 25.07 23.21 21.49 19.90 18.48 17.06 15.79 14.68 18.54 12.54 11.61 10.75 9.96 9.22 8.54 7.91 7.82 6.78 6.21 5.81 5.88 4.98 4.62 4.27 3.95 3.66 3.39 3.14 2.91 2.69 2.49 2.31 „ 9 Per cent. Col. 9. $28.67 26.80 24.18 22.14 20.81 18.68 17.09 15.68 14.41 13.20 12.11 11.11 10.19 9.86 8.58 7.87 7.22 6.68 6.08 5.58 5.12 4.69 4.31 3.95 3.68 3.33 3.05 2.80 2.57 2.36 2.16 1.98 1.82 1.67 1.54 Per cent. CoL 10. $26.01 28.65 21.50 19.54 17.77 16.19 14.68 13.85 12.14 11.08 10.03 9.12 8.29 7.54 6.85 6.28 5.67 5.15 4.68 4.25 8.87 8.52 8.10 2.91 2.65 2.41 2.18 1.99 1.84 1.64 1,49 1.81 1.28 1.11 1.01 Ybaks. 16 17 18 19 20 21 22 28 24 25 26 27 28 29 80 81 82 88 84 85 86 87 88 89 40 41 42 48 44 45 46 47 48 49 50 For explanation, see page 199. 228 TABLE Showing how much money must be in compounded, annually, to amount Years. 21 22 23 24 25 26 27 28 29 30 31 32 33 34 a5 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 „ 3 Per cent. Col. I. S35.08 34.05 33.07 32.10 31.17 30.33 29.38 28.52 27.69 26.89 26.10 25.34 24 60 23.89 23.19 22.52 21.86 21.21 20.61 20.01 19.42 18.86 18.31 17.77 17.25 16.75 16.27 15.58 15.33 14.89 «3^ Per cent. „ 4 Per cent. Col. 2 S33.01 31.90 30.81 29.77 28.77 27.79 26.85 25.95 25,07 24.22 23 49 22.51 21.85 21.11 20.40 19.70 19.04 18.39 17.77 1717 16.59 16.04 15.49 14.96 14.46 13.97 13.50 13.04 12.60 12.17 Col. 3. S31.05 29.85 28.71 27.60 26.54 25.52 24.54 23.60 22.69 21.82 20.98 20.17 19.39 18.65 17.93 17.24 16.58 15.94 15.33 14.40 14.17 13.63 13.10 12.60 12.11 11.65 11,20 10.74 10.35 9.96 Per cenL Col. 4. $29.19 27.93 26.73 25.58 24.48 23.42 22.42 21.45 20.53 19.64 18.80 17.99 17.21 16.47 15.76 15.08 14.43 18.81 13.21 12.64 12.10 11.58 10.09 10.61 10.15 9.71 9.29 8.89 8.51 8.15 „ 5 Per cent. Col. 5. $27.43 26,12 25.23 23.70 22.57 21.49 20.46 19.50 18.57 17.68 16.84 16.03 15.28 14.55 13.86 13.20 12.56 11.99 11.40 10.86 10.84 9.85 9.88 8.93 8.51 8.10 7.72 7.35 7.00 6.66 For explanation, see page 199. No. 15. vested, every year, for 20 years, and to $1,000, in 21 to 50 years. 22^ „ 6 Per cent. Col. 6. $24.19 22.83 21.53 20.31 19.17 18.08 17.06 16.09 15.18 14.32 13.55 12.75 12.02 10.86 10.70 10.09 9 52 8.99 8.48 800 7.54 7.12 6.72 6.34 5.98 5.64 5.32 5.02 4.73 4.47 7 Per cent. Col. 7. $21.31 19.91 18.61 17.39 16.25 15.19 14.19 13.26 12.40 11 58 10.83 10.12 9.46 8.84 8 27 7.72 7.22 6.75 6.30 5.89 5.51 5.15 4.81 4.50 4.20 3.93 8.67 3.43 3.20 2.99 8 Per cent. Col. 8. $18.74 17.35 16.06 14.87 13.77 12.75 11.80 10.93 10.12 9 38 8.68 8.04 7.44 6.89 6.38 5.91 5.47 5.06 4.69 4.34 4.02 3.72 3.45 3.20 2.96 2.74 2.53 2.35 2.17 2.01 „ 9 Per cent. Col. 9. $16.45 15.09 13.83 12.71 11.66 10.69 9.81 9.00 8.26 7.57 6.95 6.38 5.85 5.37 4.92 4.52 4.14 3.80 3.49 3.20 2.93 2.69 2.48 2.27 2.08 1.91 1.75 1.61 1.47 1.35 Per cent. Col. 10. $14.43 13.12 11.28 10.84 9.86 8.96 8.15 7.42 6.73 6.12 5.56 5. 4. 4. 3. 06 60 18 80 3.45 3.15 2.86 2.60 2.36 2.15 1.95 1.77 1.61 1.47 1.33 1.21 1.11 1.00 .91 Years. 21 22 23 24 25 26 27 28 29 30 31 32 38 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 For explJanation, see page 199. TABLE NO. 16. Aotuaries' Table of Mortality. Nrr Hr EHIUHS, Number Dm*. Pe.™.t ot iJq»cudoa Level Ann. N^tuml livine- """™ Ihe livini. of lift- Pr™.ioin- foHife!' Col. 4, 10 100,000 616 .006760 48. 36 10.48 6.50 11 99,334 674 .006786 47.88 10.63 6.53 13 98,«.W 673 .006812 47.01 10.84 6.55 13 97.878 671 .008848 46.33 11.07 6.59 U 97,307 971 .008808 45.64 11.30 6.63 15 B«,636 971 .0IKI944 44.96 11.54 6.68 16 9.'>.U6n 673 .007003 44.37 11.80 6.73 17 9.5.293 673 .007082 . 43.58 13.07 6.79 18 94.630 675 .007134 43.88 13.35 6.86 10 »1B45 677 -007309 43.19 13.64 6.98 20 93,268 680 .007291 41.49 13.9.1 7.01 21 93,088 683 .007377 40.70 13.37 7.09 sa 91,905 686 .007464 40.09 13-61 7.18 33 91,319 690 .007564 39.39 13.96 7.27 2i 90,529 694 .007966 38.68 14.33 7.37 26 89.835 .007770 37.98 14.73 7.47 se 89.137 703 .007887 37.37 15.18 7.58 27 88,4:W 708 .006006 36.58 15.56 7.70 87,726 714 .008139 85.88 16.01 SB 87,012 720 -008375 35.15 16.46 7;8« go 86,293 737 .008425 S4.43 16.97 8.10" 81 85,,'ift'i 784 .008578 83.72 17.49 8.35 S3 84.831 743 .009747 33.01 18.04 8.41 33 »t.089 750 .008919 33.80 18.63 8.58 34 88,839 758 .009095 31.58 19.33 8.75 35 82,.'i81 767 .009888 30.87 19.87 8.03 36 81,814 T76 .009485 BO. 15 30.54 9.13 37 81.088 78.1 .009687 29.44 31.26 9.31 38 80,253 795 .009906 38.73 32,03 9.53 39 79,4.% 805 .010131 38.00 33.83 9.74 40 78,6t8 815 .010363 37.38 38.68 0.96 41 826 .010612 26,56 34.59 10.20 42 77! 012 830 .010894 25.84 35.55 10.48 48 76,173 857 -011351 25.12 36.99 10.82 44 75,316 881 .011697 24,40 37.88 11.25 45 74,4.^5 909 .012313 2.1. 69 38.85 11.74 46 73,536 944 .012889 22.97 30.08 13.35 47 73,582 981 -013517 23.27 13.00 71,801 1.031 .014380 21.56 33-77 13.71 49 70,580 1.083 .015061 20.87 34.28 14.48 W 69.517 1,108 ,015939 20.18 85.78 15.33 Jl 68,409 1,158 .019898 19.50 37.42 16.33- 67,353 1,307 .017947 18.63 39.15 17.38 J8 . 68,046 1,381 ,019093 18.18 41.00 18.36 d4 64,785. 1,316 .030313 17.50 42.95 19.53 TABLE No. 16. — Comtinued. Aotuaries' Table of Mortality. "^ Nut Phiwiums. Numb« Dnlh. '■ ^«n.._of I«=Htion percent L^vcl Ann. living. ejchyar. J eUvigg. Pt'o..H)in- 'nHifc,''™ '^tj-^ 56 63,489 1,375 031664 16.86 $45.03 S20.83 se 62,094 1.438 023138 16.33 47.33 32.34 -57 60,S5S 1,497 034679 15,59 49.57 28.73 58 59,181 1,561 028386 14, B7 52.07 36,37 59 57,800 1,827 038247 14.37 54.73 37.16 BO 65,973 1.698 030336 13,77 57.56 39.17 61 54,375 i;770 032613 13,18 60,57 31.36 63 52,505 1,844 O35120 13.61 63,78 33.77 88 50,661 1,9IT 037840 12.05 67,20 86.38 64 48,744 1,990 040826 11.51 70 84 39.36 « 46,754 2,061 044082 10.97 74.72 42,39 66 44,898 3.138 0476U 10,46 78.85 45.78 67 42,565 3,191 051474 0.96 63.34 49.49 «8 40,374 3,246 055630 9.47 87.91 58.49 W 38.128 3,391 060087 9.00 92.89 57.78 70 a5,837 3,337 064933 8.54 98.30 63.44 71 83,510 3,351 OT0158 8.10 103,87 67.46 72 31,159 2,363 075805 7.67 109.91 73,89 73 38,797 2,358 081884 7.26 118.36 78.73 74 2H,439 3.S39 088468 6.86 123.35 85.07 75 34.100 9,303 096560 6.48 130.61 91.89 76 31.797 3.349 103179 6.11 138.49 99.31 77 19,548 2. 179 111469 5.78 146.94 107.18 78 17,369 2.093 12W44 5.43 155.98 115.81 79 15.377 1,987 180065 6.09 165.68 135.06 80 13,390 1,806 140406 4.78 176.10 135.01 01 11.424 1,780 151436 4.48 187.33 145.61 82 9,694 1,583 168194 4,18 109.49 156.93 83 8.113 1,437 175913 8.00 313.78 169.15 84 6,685 1,^68 189678 8.63 237.42 182.88 85 5,417 1,111 205095 3. 36 243.73 197.31 86 4,806 958 333480 3.10 262,08 218,93 87 8,348 811 343334 3.84 283.89 332.93 88 3,S37 673 285374 3.59 306.38 355.07 89 1,804 545 392383 3.35 383,15 281.14 90 1,319 427 333730 3.11 311.28 91 8B2 332 360987 399 !37 347.10 93 570 405363 l!67 439,95 389.68 fl3 889 165 457327 1.47 486.07 439.64 94 184 95 516304 1.38 537.29 496,45 95 564370 1.12 593.71 561.80 «J 37 34 648840 .99 645.63 628.70 97 13 9 893308 .89 693,08 665.66 «8 4 8 750000 .75 767,74 721,15 «9 1 1 1 000000 .50 961.54 961,51 For ezplaoation, see page IH. TABLE NO. 17. American Experience Table of Mortality. N«T PUMIUtU. Number Daihi Prr H.L uf dealhi ID EipecUlioil Amentan— 4 pec cent. Uving. """""■ .he ti™j. '"■ "for iiir^ Pc'ni.wi,^ CJ-3- CqL* 100,000 749 .007490 48.78 10.53 7.30 1 99,351 746 .007616 48 08 10.70 7.28 3 9e,5M 748 .007543 47,45 10.88 7.25 13 97,763 740 .007569 46,80 11.06 7.38 4 97,032 737 .007596 46,16 11. a« 7.30 a 98,285 735 .007634 45.00 11,47 7.S4 e 95,550 7a2 ,007661 44.8S 11,69 7.37 7 94.818 729 ,007688 44.19 11.91 7.39 S , 94,1)89 727 .007737 43.58 13.15 7.43 9 1 ft%362 73."; .007765 43.87 12.40 7.46 M) 93,637 728 .007805 42.30 12.67 7-SO 1 91,914 -007855 41.53 12.95 7-66 J3 91,193 721 .007906 40.85 18 34 7-60 a 90,471 730 .007958 40.17 13-66 7 65 14 89,7S1 719 .008011 39.49 13.87 7 70 25 89,032 718 .008065 38.81 14.21 7-75 Ml 88JU 718 .008180 38-12 14.57 7.83 n 87,596 718 .008197 37,43 14.M 7.88 J8 86.878 718 .008264 36.73 15.35 7.95 Jfl 86,180 719 .0083« 36.03 15.77 8.03 }0 8.->,441 720 .008427 35.33 16.21 8.10 n ftf,731 731 .009510 84.68 16.68 8-18 K S4,000 733 -008807 33.98 17 18 8-28 J3 N8,377 736 ,008718 38-31 17.70 8.38 M 82,551 739 -008831 33,50 18.36 8.49 M 81.823 733 -008948 31-78 18.84 8. BO K 61.090 73T .009089 31,07 19.46 8.74 7 80,353 743 IH)9234 30 -a5 20 18 B 79.611 748 .009408 39.82 20.83 9:05 M 78.883 758 .009.W6 28.90 81,57 9.22 10 78,106 785 -009794 28.18 22 35 9.42 11 77.341 774 ,010006 37.45 23,19 9-82 a 76.567 785 ,010352 26.73 24.08 9.86 13 7.5.78a 797 ,010517 36.00 a-i.os 10,11 14 74.985 812 ,010829 35.27 at.04 10.41 15 74,173 ,011163 34.54 87.13 10.73 W 73,345 818 .011,-M3 23.81 28.37 11,13 7 73.497 870 .012000 23-08 29.60 11.54 18 71.627 896 .013.509 23.36 30.81 12.03 8 70,731 937 .013106 82,21 13.60 lO m,mi 963 .013781 30,91 33.70 13.25 1 68,842 1.001 .014541 20-20 35.29 13-98 M 67.841 1,044 -OL-iSSg 19-49 36.98 u.m TABLE No. 17. -Continued. American Experience Table of Mortality. Nkt Primiums, D«ihi ■■ American- Atticeou Livcl Ann Imng. MCh yMT. , c living. Pt-m.1Jnn- •'€1? ™",™ 38 86,797 1,001 018333 18.70 (38.79 (15.71 154 65,706 1.143 017396 18.00 40.73 18.73 55 64,583 1,199 018571 17.40 42,79 17.86 58 63,364 1,360 010885 16.73 45.00 19.13 57 63,104 1,325 031335 18.05 47.35 M.53 68 60:779 1,384 032038 15.30 49.87 23.ft'i 59 59.385 1468 024730 14.74 53.57 33,77 « 57,911 1,546 □26693 14.10 55.45 3.), 87 61 68.371 028880 13.47 58.54 27,77 <2 54,748 l!713 031293 12.88 61-84 30.09 «3 53,080 1,800 033943 13.38 85.39 33,64 «4 1,889 036873 11.67 69.18 35.46 «S 49^841 1,930 040129 11.10 73.35 38,59 66 47,361 3,070 048707 10.54 77.81 42.08 fl7 45,391 3,158 047647 10.00 83.38 45.83 «8 48.133 3,343 053002 9.47 87.29 .50.00 «9 40,890 3.331 ttW762 8.07 93.65 .M.58 70 38.509 3,391 081993 8.48 98.39 59.61 71 38.178 3.448 067685 8.00 104.54 65.07 72 88,730 3,487 073733 7,55 in. 13 70.81 73 81,-J48 2,505 080178 7,11 118 31 77.09 n 38.788 3,501 087028 6,6B 125.85 83,68 75 3B.y87 2,476 004371 6,37 134.14 00.74 76 33.761 2,431 I033U 5,88 143.19 98.38 77 31.330 3,369 111064 5.40 153.13 106.79 78 18,961 3.291 130827 5.11 184.11 116.18 70 18,670 3,196 131734 4.74 176-30 128.87 80 14,474 8,091 144466 4,30 180.87 138.01 81 I2,;je8 1,964 1.58805 4.05 204,05 153.89 82 10,41B 1,816 174297 3.71 321.82 167.59 83 8,003 1,848 10)561 3.30 340.00 184.10 84 6,955 1,470 3I135B 3,08 263,88 303.33 85 5,48.5 1,293 385552 3.77 388.60 336.40 86 4,193 1,114 365881 3.47 318,81 255.46 «7 3,079 933 30.3020 3.18 354.03 291.37 88 3,146 744 346693 1. 91 394,53 833,36 8B 1,403 555 395893 1.66 441,22 880,64 SO 847 454545 1.42 497.08 437.06 91 462 249 583486 1,19 566.37 S11.98 316 137 634259 .98 649.34 809.88 ■93 79 734177 .80 738.31 705.94 04 31 18 857143 .64 840.75 H34.18 iin 3 8 I OOOOOO ,50 961,54 081.54 For explanation, see page 2" TABLE No. 18. I from the American Elxperience Tabid of UortoJlty, ahowlnar the chanoea, &t a given age, of dy- ing' '^tbln a Bpeoifled number of years thereafter- ilj ■•